U.S. Session Forex Recap – May 11, 2016

  • U.S. JOLTS job openings up from 5.61M to 5.76M in March vs. 5.55M forecast
  • U.S. NFIB Small Business index rose from 92.6 to 93.6 vs. 93.2 forecast
  • U.S. wholesale inventories up by 0.1%, sales up 0.7%
  • EIA upgraded global oil demand forecasts for this year and 2017
  • RBNZ Financial Stability Report: Housing and dairy industry pose risks
  • RBNZ head Wheeler acknowledged slower growth in trade partners

What a comeback for the comdolls! Thanks to a pickup in oil prices, higher-yielding currencies managed to ride a wave of risk appetite in the U.S. session.

Major Events:

Revised EIA oil forecasts – The U.S. Energy Information Administration (EIA) issued another batch of revisions for their global oil forecasts, but this time it wasn’t all gloom and doom. In fact, analysts raised their global demand estimate for this year by 270K barrels per day, projecting a year-over-year increase of 1.43 million barrels per day. To top it off, they also upgraded their 2017 demand forecast to 1.54 million barrels per day.

The EIA highlighted a possible pickup in Chinese demand for oil, likely boosting consumption by 0.4 million barrels per day this year and the next. The agency also expects stronger gasoline and jet fuel consumption this year, as well as continued growth in India’s demand for transportation fuel.

Analysts also noted that the oil market has calmed down and is starting to stabilize, as volatility has been subdued compared to the first quarter of the year. WTI crude oil popped up from the $43/barrel area to a high of $44.75/barrel while Brent crude oil rallied to a high of $45.64/barrel.

Upbeat medium-tier U.S. data – It was all green on the U.S. economic front, although the releases were just medium-tier ones. The JOLTS report showed a rise from 5.61 million to 5.76 million in job openings for March, higher than the projected 5.55 million figure.

Meanwhile, the NFIB Small Business index improved from 92.6 to 93.6, outpacing the consensus at 93.2 and indicating stronger business conditions. Wholesale inventories rose 0.1% in March while sales climbed 0.7%, marking their fastest pace of growth since April last year.

RBNZ Financial Stability Report – Just before U.S. session traders were able to call it a night, the RBNZ released their Financial Stability Report and caused huge moves for the Kiwi. Contrary to what Finance Minister Bill English suggested earlier, central bank officials refrained from adjusting lending restrictions in the housing market but mentioned that they are looking into other macro-prudential measures.

Policymakers also pointed out that the housing sector and dairy industry are posing challenges to financial stability. RBNZ head Wheeler specified that the level of problem loans in the dairy sector could increase significantly in the coming year. Yikes!

Major Currency Movers:

Commodity currencies – The comdoll gang got back in the game, boosted by rising crude oil prices and the lack of adjustments in the RBNZ report.

AUD/USD climbed from a low of .7326 to a high of .7391, USD/CAD fell from a high of 1.2980 to a low of 1.2910, and NZD/USD is pulling up to the .6800 handle. EUR/AUD retreated to the 1.5400 mark, EUR/NZD dipped to a low of 1.6709, and EUR/CAD is down to 1.4685.

JPY – The yen continued its losing streak to its counterparts as risk appetite was in play for most of the day. Hey, that rhymes!

USD/JPY is now hovering around the 109.00 levels, EUR/JPY is up to a high of 124.20, and GBP/JPY climbed to a high of 157.80 before consolidating. AUD/JPY is testing the resistance at 80.50, CAD/JPY is up to 84.56, and NZD/JPY reached a high of 74.34.

Watch Out For:

  • 12:30 am GMT: Australia’s Westpac consumer sentiment
  • 1:10 pm GMT: RBNZ Governor Wheeler’s testimony
  • 1:30 am GMT: Australian home loans (-1.4% expected, +1.5% previous)
  • 5:00 am GMT: Japanese leading indicators

See also:

Asian Session Recap

London Session Recap

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