Article / 09 March 2017 at 22:08 GMT

US Market Wrap: Dollar wilts under Draghi sunshine

FX Trade Strategist /
saxo rates

Watch list:

  • Australia: Home Loans-January                                   0030 GMT 

US Data Released :

  • Initial Jobless claims (Actual 243,000 vs. forecast 235,000) 

Forex traders were on edge as they a started the day on Thursday. The European Central Bank statement and press conference were looming and oil prices were below $49.00/barrel.

EURUSD opened at 1.0557 and dropped down to 1.0542 on what was perceived to be a dovish statement. Things changed during Mario Draghi’s press conference. Draghi ever so subtly hinted that the ECB was moving toward a more neutral policy. The hint was so subtle that EURUSD which spiked to 1.0613 dropped back to 1.0565 by mid-morning and then spent the rest of the day drifting in a 1.0565-1.0595 range.

USDJPY rose from a low of ¥114.52 to ¥114.94 where it finished the day with those traders more concerned about Friday’s US nonfarm payrolls report and interest rates. It helped that US 10 year yields nudged 2.60%

Sterling traders rode a bucking bronco. GBPUSD bounced erratically within a 1.2133-1.2194 range. It failed on its second attempt to break the top of the range and inched lower into the close.

The broad US dollar weakness gave the commodity currency bloc a reprieve. USDCAD and AUDUSD retraced early morning losses as and finished with small gains. The kiwi dollar was unchanged.

Crude oil traders were on edge. WTI bounced from the opening $48.84/barrel level and climbed to $50.13/b. But the wheels came off that rally bus and WTI plummeted to just $48.55/b by mid-afternoon before inching back to $49.69/b at the close. Reuters reported that Saudi officials told US oil producers they should not assume Opec would extend output curbs to offset rising US production.

Wall Street dipped in the early afternoon but recovered those losses to finish the day with tiny gains.


 It would be a mistake to assume that Opec will trim output to make up for rising US production, according to a Reuters report. Photo: Shutterstock


Remember when Snap crackled and popped? TradingFloor editor Clemens Bomsdorf provides an update on the company in: A bumpy week for Snap

– Edited by Robert Ryan

Michael O'Neill is an FX consultant and currency strategist and author of the Trade of the Day at Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.

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