U.S. Session Forex Recap – June 7, 2016

  • U.S. labor market conditions index fell from -3.4 to -4.8
  • Fed head Yellen: Disappointed with latest NFP report
  • Yellen: Uncertainty with domestic demand, potential Brexit, inflation, and productivity growth

The Greenback extended its slide against most of its forex peers after Fed Chairperson Janet Yellen seemed to suggest that a June hike is off the table.

Major Events:

Yellen’s testimony – Most market participants had been waiting to see how Fed head honcho Yellen would react to the dismal NFP report and as expected, she acknowledged that the results were disappointing. Even though she noted that the slight pickup in wages was encouraging, she mainly highlighted the persistent uncertainties when it comes to domestic demand, the global economic situation if a Brexit takes place, the inflation outlook, and productivity growth.

As always, Yellen maintained that the current monetary policy stance is appropriate and warned that hiking too soon might pose more risks to the economy. The rest of her 4,000-word speech was pretty balanced, hinting that the Fed head might prefer to err on the side of caution in the next FOMC decision.

Risk appetite returns? – U.S. equities are partying over the idea that the Fed could sit on its hands for much longer, pricing in a few more months of low borrowing costs. The S&P 500 index closed 10.28 points higher to 2,109.41 (+0.49%) and the Nasdaq advanced 26.20 points to 4,968.71 (+0.53%) while commodities also posted gains. Gold rose to $1,248.50/ounce, WTI crude oil is trading at $49.62/barrel, and Brent crude oil recovered to $50.41/barrel.

Major Currency Movers:

USD – The Greenback was still in a weak spot in the forex arena, as traders continued to price in lower odds of a rate hike in June or July.

EUR/USD edged higher from a low of 1.1325 to a high of 1.1391, GBP/USD is holding on to the 1.4450 minor psychological mark, USD/JPY pulled up by a hundred pips to the 107.35 area, and USD/CHF is testing support at the .9700 handle.

Commodity currencies – The comdolls gang scored victory for the day, taking advantage of dollar weakness and the recovery in commodity prices.

AUD/USD bounced off its .7316 low to a high of .7380, NZD/USD popped up to a high of .6948, and USD/CAD slid from the 1.2950 area to a low of 1.2804. AUD/JPY climbed to a high of 79.34, NZD/JPY is up to 74.25, and CAD/JPY zoomed up from the 82.50 area to test the 84.00 handle.

Watch Out For:

See also:

Asian Session Recap

London Session Recap

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