12 September 2016 at 22:07 GMT
- Australia: NAB Business Conditions August 2130 GMT
US Data released:
New York traders walked into a risk-averse market. The US dollar and the Japanese yen were higher, oil prices were lower and global equity indices were in the red. And then someone let the doves out.
Actually it was only one dove, but Federal Reserve Governor Lael Brainard delivered a pretty convincing argument as to why US rates should remain low, citing inflation undershoot, labour market slack and risks from foreign markets.
Suddenly it was “risk-on”. EURUSD popped to 1.1264 from 1.1215, USDJPY bounced to 101.85 from 101.50 and the GBPUSD rally accelerated. The commodity currency bloc also got into the act and posted gains. The retreat in the US dollar helped oil prices rise. WTI jumped to $46.51 from $44.72, which may have also been the result of a bit of short squeeze. Traders appear to have ignored a new Opec forecast of higher non-member production and lower global demand in 2017.
US equity market indices were deep in the red prior to Brainard’s comments. The sellers became buyers and the indices closed with strong gains.
The retreat in the US dollar helped oil prices rise. Photo: iStock
– Edited by Susan McDonald
Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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