Article Highlights

  • FOMC heads Brainard and Fischer highlight uptick in inflation
  • EIA reported a decline of 106K barrels per day in U.S. oil production
  • Fonterra cut milk payout forecast from 3.95 NZD to 3.90 NZD
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Another day, another gain for crude oil! Commodity currencies ended higher against their forex peers on news of declining U.S. oil production.

Major Events:

EIA oil production report – It looks like Saudi Arabia’s plan to drive out competition from U.S. oil producers from the market is starting to work, as the latest report from the Energy Information Administration indicated a significant decline in output. Based on their April estimates, U.S. shale oil production could be reduced by 106K barrels per day to 4.871 million barrels per day, easing the upward pressure on supply.

WTI crude oil popped up to $37.82/barrel and Brent crude oil climbed to $40.68/barrel upon hearing these reports.

FOMC officials’ speeches –  Even with no top-tier reports lined up from the U.S. economy yesterday, the Greenback still enjoyed some forex volatility when a couple of FOMC members gave testimonies.

First up was Fed official Lael Brainard who acknowledged the upbeat January inflation readings, citing that the economic outlook is getting clearer but that it’s still important to stay patient. Next was Fed Governor Stanley Fischer who also mentioned that price levels are starting to turn higher.

Major Currency Movers:

CAD – The Loonie chalked up another positive day, as the rally in crude oil boosted the Canadian currency.

USD/CAD broke below the 1.3300 handle to a low of 1.3262, CAD/JPY popped up to a high of 85.66, EUR/CAD is testing support at the 1.4650 minor psychological mark, and GBP/CAD hit a low of 1.8870.

USD – The Greenback gave up ground to most of its forex rivals, even after FOMC officials sounded more upbeat than usual.

EUR/USD rallied back above the 1.1000 mark after dipping to 1.0950, USD/JPY slid to a low of 112.98, USD/CHF is down to the .9950 minor psychological support, and GBP/USD is pulling up to the 1.4250 area.

Watch Out For:

  • 11:50 pm GMT: Japanese current account balance
  • 11:50 pm GMT: Japan’s final GDP for Q4 2015 (no change from -0.4% estimate expected)
  • 12:30 am GMT: Australia NAB business confidence index
  • Tentative: Chinese trade balance (339B CNY expected, 403B CNY previous)

See also:

Asian Session Recap

London Session Recap

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