U.S. Session Forex Recap – June 3, 2016

  • ECB press conference: Q2 growth may be slower than Q1
  • ECB press conference: QE is proceeding smoothly
  • ECB Governor Draghi: Risks to growth tilted to the downside, inflation to remain low in the coming months
  • ECB upgraded 2016 GDP forecast from 1.4% to 1.6%
  • ECB upgraded 2016 inflation forecast from 0.1% to 0.2%
  • OPEC meeting ended with no agreement on production caps
  • Saudi Arabia oil minister: OPEC nations committed to working together
  • U.S. initial jobless claims at 267K vs. 270K forecast
  • U.S. crude oil inventories down by 1.4 million barrels vs. 2.7 million forecast

All eyes and ears were on the ECB and OPEC pressers, allowing volatility to pick up after stalling earlier in the day.

Major Events:

ECB press conference – After the ECB announced its decision to keep monetary policy unchanged as expected, head honcho Draghi grabbed the mic to share more deets and answer some questions during the presser. He assured that the central bank’s current QE program is running smoothly but noted that there are risks from a potential Brexit and weak global growth.

But Dovish Draghi was just warming up! Later on, he admitted that risks to growth are tilted to the downside and that inflation is likely to remain low in the coming months. He even projected weaker domestic consumption, likely causing Q2 growth to be slower than Q1. Still, the ECB’s upgraded forecasts showed slight upgrades for 2016 growth from 1.4% to 1.6% and inflation from 0.1% to 0.2%.

No oil output cap from OPEC – The much-anticipated OPEC meeting ended with no agreement among the oil-producing nations on output levels. Bummer!

Even so, the post-meeting mood seemed relatively positive as the new Saudi Arabia oil minister mentioned that the countries have committed to working together to stabilize the markets. He added that the oil market is currently in good shape and that prices are moving in the right direction.

Meanwhile, Qatar’s energy minister also supported the idea that crude oil has bottomed out and that the worst is already over. Even the oil ministers from Venezuela and Kuwait have noted that the meeting turned out well.

Crude oil prices seemed unimpressed, though, as WTI crude oil dipped to a low of $47.94/barrel while Brent crude oil fell to a low of $48.82/barrel. The commodity price recovered soon after, making its way close to the $50/barrel levels again.

 

Major Currency Movers:

EUR – The downbeat tone of the ECB presser forced the euro to return some of its recent gains against its forex rivals.

EUR/USD retreated from a high of 1.1217 ahead of the press conference to a low of 1.1145, EUR/JPY resumed its slide and hit a low of 121.10, EUR/GBP turned from the resistance at .7775 then dropped to a low of .7738, and EUR/NZD fell from the 1.6500 levels to test support around 1.6350.

CAD – The oil-related Loonie tossed and turned towards the end of the OPEC meeting but ended mostly lower on the lack of oil output agreements.

USD/CAD tested support around 1.3050 then moved up to a high of 1.3144, CAD/JPY stalled around the 83.75 level then broke to a low of 82.68, EUR/CAD popped up to a high of 1.4662 before caving to euro weakness, and GBP/CAD bounced to a high of 1.8985.

Watch Out For:

  • 12:00 am GMT: Japanese average cash earnings y/y (0.9% expected, 1.5% previous)
  • 1:00 am GMT: New Zealand ANZ commodity prices (-0.8% previous)
  • 1:45 am GMT: Chinese Caixin services PMI (52.0 expected, 51.8 previous)

See also:

Asian Session Recap

London Session Recap

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