U.S. Session Forex Recap – May 17, 2016

  • Empire State manufacturing index slipped from 9.6 to -9.0 vs. 7.2 forecast
  • WTI crude oil up nearly 4% to $47.78/barrel

The lack of top-tier releases during the U.S. session left traders hunting for clues from other markets such as commodities.

Major Events:

Oil price rally – Crude oil ripped higher at the start of the week, boosted by supply disruptions in Nigeria and political turmoil in Venezuela. Insurgent attacks on major oil pipelines in Nigeria is currently weighing on the country’s production, dragging output down to their lowest levels in decades. Meanwhile, conflict in Venezuela has led to several power outages, dampening production as well.

This prompted Goldman Sachs to predict that the oil market likely shifted to a deficit this month, backpedaling on their previous forecast that the commodity is likely to hit $20/barrel on oversupply. The investment bank estimated that crude oil could hit $50/barrel in the second half of this year, citing stronger demand from India, China and Russia.

Gold price drop – The precious metal didn’t move in tandem with crude oil prices, as reports of renowned gold bull John Paulson cutting his long position hit the airwaves. This marked his fund’s third reduction in bullish gold bets this year, indicating that he might be shifting his long-term bias or simply booking profits. Gold prices fell to $1,276.85/ounce from its May high of $1,303.80/ounce.

Major Currency Movers:

CAD – The Canadian dollar was ahead of the forex pack in the New York trading session, getting a boost from the rally in crude oil.

USD/CAD fell from a high of 1.2942 to a low of 1.2876, CAD/JPY climbed from a low of 84.13 to a high of 84.63, EUR/CAD is testing support at the 1.4600 handle, AUD/CAD is still hovering around .9410, and NZD/CAD is cruising at .8750.

GBP – The pound was able to hold on to its gains, spurred by a slightly larger lead in anti-Brexit votes in the latest surveys.

GBP/USD bounced from the 1.4350 area to a high of 1.4452, GBP/JPY made its way up to a high of 157.83, EUR/GBP slid to a low of .7822, and GBP/AUD broke past the 1.9800 handle to a high of 1.9829.

Watch Out For:

  • 1:30 am GMT: RBA meeting minutes (Remember how their decision turned out?)
  • 3:00 am GMT: New Zealand quarterly inflation expectations (1.6% previous)
  • 4:30 am GMT: Japan’s revised industrial production (no change from 3.6% expected)

See also:

Asian Session Recap

London Session Recap

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