U.S. Session Forex Recap – May 26, 2016

  • U.S. flash services PMI down from 52.8 to 51.2 vs. 53.1 forecast
  • BOC kept interest rates unchanged at 0.50% as expected
  • U.S. crude oil inventories down by 4.2 million barrels

The Loonie was the start of the show, as it got a boost from the BOC interest rate decision and the drop in crude oil inventories.

Major Events:

BOC interest rate decision – Policymakers over at the Bank of Canada still decided to sit on their hands for the nth time, issuing a relatively neutral monetary policy statement. According to head honcho Poloz, the current monetary policy stance is appropriate and that risks to their inflation outlook are roughly balanced.

The BOC acknowledged that the forest fires in Alberta might shave off around 1.25% of GDP growth but noted that economic performance has been in line with their expectations so far. BOC officials also mentioned that the Loonie is trading around levels assumed in their April projections, hinting that they’re not likely to jawbone or intervene anytime soon.

Crude oil climb – Following data from the American Petroleum Institute which showed a decline of 5.137 million barrels in crude oil inventories, the report from the U.S. Energy Information Administration indicated a reduction of 4.2 million barrels. This is a larger draw compared to the estimated drop of 1.7 million barrels.

WTI crude oil popped up close to the $50/barrel mark and is trading at $49.59/barrel while Brent crude oil is hovering around $49.75/barrel.

 

Major Currency Movers:

CAD – The Canadian currency let out a sigh of relief when the BOC refrained from lowering rates, forcing bears to exit their short positions.

USD/CAD retreated from above the 1.3100 mark to a low of 1.3014, CAD/JPY surged past the 84.00 handle to a high of 84.68, EUR/CAD fell to a low of 1.4524, and GBP/CAD is down to 1.9150.

GBP – The pound chalked up yet another winning day, as traders seem to be pricing in stronger odds of avoiding a Brexit.

GBP/USD broke above the 1.4650 minor psychological mark to a high of 1.4697, GBP/JPY is testing the 162.00 major psychological resistance, EUR/GBP is down to a low of .7565, and GBP/NZD reached a high of 2.1895.

Watch Out For:

  • 1:30 am GMT: Australia private capital expenditure q/q (-3.2% expected, +0.8% previous)

See also:

Asian Session Recap

London Session Recap

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