Not even stronger than expected reports were enough to lift the Greenback’s spirits during the U.S. session as the currency took its cue from bond yields.
Meanwhile, oil-related Loonie drew a bit of support from a surprise decline in U.S. oil stockpiles as reported by the API.
- U.S. existing home sales up from 5.37M to 5.48M vs. 5.42M forecast
- Canadian wholesale sales slumped 1.2% vs. projected 0.6% uptick
- API: Crude oil inventories down 6.356 million barrels
- New Zealand GDT auction yielded 3.4% drop in dairy prices
- New Zealand visitor arrivals up 1.9% in Oct
- Fed head Yellen: Central bank is “reasonably close” to goals
- Yellen: Gradual rate hikes needed to avoid dual risks for inflation and unemployment
Crude oil bounces back
Thanks to a surprise fall in oil stockpiles as reported by the American Petroleum Institute, oversupply concerns eased despite rising oil rig counts in the past weeks.
The API reported a draw of 6.356 million barrels in inventories versus estimates of a 1.545 million reduction. This sends positive vibes ahead of the EIA data due later today, which is expected to show a drop in supply as well.
- WTI crude oil is up 0.62% to $57.18 per barrel
- Brent crude oil is up 0.13% to $62.78 per barrel
Fed head Yellen’s speech
Even though Fed head honcho Yellen is set to step down from her post when her term expires early next year, her remarks on inflation and monetary policy still carried weight in terms of market movement.
Yellen acknowledged that the central bank is “reasonably close” to achieving its goals but that it should carry on with gradual interest rate hikes to avoid dual risks. In particular, she referred to the likelihood of inflation running below target for much longer and pushing the unemployment rate far too low.
She also admitted that she is “very uncertain” about a rebound in inflation happening anytime soon, stressing the possibility that price levels could remain low for years to come.
- 10-year bond yield is down 0.59% to 2.347%
- 30-year bond yield is down 0.49% to 2.748%
- 5-year bond yield is down 0.80% to 2.090%
Bond yields spent most of the trading session deep in the red before pulling up slightly higher at the end of the day, probably as traders looked forward to the release of the FOMC minutes next.
Major Market Mover(s):
The scrilla gave up most of its earlier gains as weaker bond yields, Yellen’s downbeat view on inflation, and risk-taking came into play.
USD/JPY ticked down from 112.61 to 112.26, USD/CHF fell from .9947 to .9906, AUD/USD popped up to a high of .7590, and USD/CAD is down to 1.2770.
AUD & NZD
Commodity currencies were still on a tear for the most part of the day, buoyed higher by risk appetite. The Loonie’s gains, however, were muted after Canada printed a downbeat wholesale sales report and NAFTA talks remained at a standstill.
NZD/USD rallied to a high of .6854 despite the decline in GDT dairy prices, AUD/JPY is up to a high of 85.29, NZD/JPY advanced to 76.90, and EUR/NZD is down to the 1.7150 area.
Watch Out For:
- 12:30 am GMT: Australia MI leading index (0.1% previous)
- 1:30 am GMT: Australia construction work done q/q (-2.1% expected)