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Risk appetite seemed to pop its head back in the financial markets as U.S. equities edged higher while crude oil rebounded thanks to a huge reduction in inventories.

  • U.S. import prices rose 0.5% versus expected 0.2% uptick
  • Fed official Rosengren: Worried about an over-heating economy
  • Rosengren: Three more rate hikes this year is reasonable
  • U.S. crude oil inventories down 5.2M barrels vs. expected 2M reduction

Major Events:

Lower U.S. crude oil stockpiles

In line with the data from the American Petroleum Institute which printed its largest draw in crude oil stockpiles so far this year, the report from the Energy Information Administration also indicated a much larger than expected reduction of 5.2 million barrels from inventory versus the expected draw of 2 million barrels.

This allowed crude oil and other commodities to extend their gains from the earlier sessions as oversupply concerns abated. As it turns out, refineries lowered their output likely to take the previous slide in black crack into account. WTI crude oil is up 0.30% to $47.47/barrel while Brent crude oil ticked up 0.24% to $50.33/barrel.

With that, market watchers remain hopeful that the OPEC could take further action to ensure that production will stay in check in order to give this recent oil rebound some legs. Note that the oil cartel is set to convene later this month to discuss a potential extension of their output deal and that non-OPEC member Russia has expressed its willingness to cooperate if this agreement pushes through.

Hawkish remarks from Rosengren

In his testimony, Fed official Rosengren echoed the FOMC statement in saying that the weak GDP figures in Q1 are likely to be followed by above 2% growth for the rest of the year since he expects consumer activity to be revived in Q2.

He also suggested that the Fed start working on shrinking its balance sheet gradually after the next interest rate hike. Rosengren explained that the labor market is already tight and that he is worried about an over-heating economy.

To top it all off, he repeated his previous comments on how three more rate hikes this year is reasonable. That’s not just three rate hikes for 2017 but three MORE comin’ up! Take note, however, that he ain’t exactly a voting member of the FOMC this year but U.S. markets cheered his optimistic remarks nonetheless.

  • S&P 500 index advanced 2.71 points to 2,399.63 (+0.11%)
  • Dow 30 index is down 32.67 points to 20,943.11 (-0.16%)
  • Nasdaq ticked up 8.56 points to 6,129.14 (+0.14%)

Major Market Movers:

USD

The scrilla was on a slow but steady climb throughout the session as U.S. bond yields ticked higher on upbeat import prices data and hawkish Fed remarks.

EUR/USD dipped from a high of 1.0883 to a low of 1.0854, USD/JPY is up from 113.88 to 114.36, USD/CHF rallied from 1.0070 to a high of 1.0095, and AUD/USD is down from a high of .7397 to a low of .7334.

CAD

The oil-related Loonie enjoyed a bit of a boost when the EIA report reflected a larger than expected draw in stockpiles.

USD/CAD edged down from the 1.3700 area to 1.3648, CAD/JPY ticked up from 83.07 to a high of 83.75, EUR/CAD fell from 1.4893 to a low of 1.4827, and AUD/CAD hit a low of 1.0049.

Watch Out For:

  • 12:50 am GMT: Japanese current account balance
  • 2:00 am GMT: Australia MI inflation expectations (4.1% previous)
  • 2:10 am GMT: RBNZ Governor Wheeler’s testimony
  • 6:00 am GMT: Japanese Economy Watchers Sentiment index (47.9 expected, 47.4 previous)