Article Highlights

  • U.S. crude oil inventories down by 3.6 million barrels
  • RBNZ cut interest rates by 0.25% to 2.50% as expected
  • RBNZ: Further Kiwi depreciation “would be appropriate”
  • RBNZ expects to see growth strengthen in the coming year
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Commodity currencies continued to hog the forex spotlight in today’s New York trading sessions, thanks to the release of U.S. crude oil inventories and the RBNZ statement.

Major Events:

U.S. crude oil inventories drop –  The latest crude oil stockpiles report from the U.S. Energy Information Administration calmed fears of an oversupply, as inventories fell by 3.6 million barrels. This allowed WTI crude oil to pop up to a high of $38.94/barrel and Brent crude oil to land back above the $40/barrel level, but it remains to be seen whether this is just a temporary pullback or the start of a recovery.

RBNZ interest rate decision – As expected, RBNZ Governor Wheeler and his gang of policymakers decided to cut interest rates by 0.25% from 2.75% to 2.50% during the wee hours of the U.S. trading session. Policymakers cited the slowdown in emerging nations and the upcoming Fed liftoff as reasons to stay cautious.

On a more upbeat note, RBNZ officials also noted that “a recovery in export prices, the recent lift in confidence, and increasing domestic demand from the rising population” are keeping them optimistic that growth could strengthen in the coming year. Does this mean we’ve seen the last of the RBNZ’s rate cuts? Maybe, maybe not. But this ain’t the first time that a dovish move was followed by a bullish forex reaction.

Major Currency Movers:

NZD – Even though the RBNZ decided to cut interest rates again, the Kiwi was able to soar up the forex charts when the central bank shared a less dovish bias.

NZD/USD dipped to an intraday low of .6572 before reversing course and climbing by roughly a hundred pips (+1.41%), NZD/JPY fell to 79.66 then made its way back towards the 82.00 handle (+0.20%), EUR/NZD got rejected at 1.6600 and is down 23 pips (-0.12%), and GBP/NZD is down 27 pips to 2.2528 (-0.12%).

CAD – The Loonie capped off its losing streak against the dollar but still lost ground to its other forex peers.

USD/CAD is finding resistance at the 1.3600 major psychological level and is down 16 pips (-0.13%), CAD/JPY is down 105 pips to the 89.50 mark (-1.17%), and EUR/CAD is up 161 pips to 1.4957 (+1.10%), and NZD/CAD is up 107 pips to .9131 (+1.21%).

JPY – With risk aversion still in play and with forex traders somewhat reluctant to buy the U.S. dollar, the Japanese yen stepped up to take advantage of the risk-off moves.

USD/JPY broke below support at the 122.50 minor psychological level and is down 156 pips to 121.35 (-1.26%), EUR/JPY is down 12 pips to 133.75 (-0.08%), GBP/JPY is down 21 pips to 184.24 (-0.12%), and AUD/JPY is down 86 pips to 87.81 (-0.97%).

Watch Out For:

  • 12:50 am GMT: Japanese producer price index (-3.8% expected)
  • 1:00 am GMT: Australian MI inflation expectations (3.5% previous)
  • 1:10 am GMT: RBNZ Governor Wheeler’s testimony
  • 1:30 am GMT: Australian jobs report (See Forex Gump’s Trading Guide)

See more:

Asian Session Recap

London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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