Article / 08 February 2017 at 22:34 GMT

US Market Wrap: Dovish RBNZ thrashes kiwi dollar

FX Trade Strategist / www.Loonieviews.net
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Watch list:

  • Japan: Foreign Investment 2350 GMT 
  • Japan: Machinery Orders 2350 GMT 

US Data Released:

  • EIA Crude Oil Stocks Change (Actual 13.83 mln barrels versus previous 6.46 m/b) 

The New Zealand dollar is the worst performing G10 currency in New York, and the only one to lose ground against the US dollar. That is thanks to the Reserve Bank of New Zealand's late afternoon interest rate announcement. They left interest rates unchanged but issued a somewhat dovish statement expressing concern about the lofty value of the currency and said that monetary policy would remain accommodative
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EURUSD was in retreat mode when New York started but it quickly turned bid.  It rallied from a low of 1.0639 to 1.0713 before lunch and then traded narrowly around 1.0700 for the rest of the afternoon. The rally may have been due to profit taking following this week’s losses which were in part, because of Philadelphia Fed President Harker’s call for a March rate hike. But the CME Fedwatch tool says the odds for such a move are only 4.4%.

USDJPY opened at ¥112.38 and dropped to just ¥111.62 by mid-morning on mild risk aversion trading. European and US political concerns get the blame.

Sterling drifted from a low of 1.24777 to 1.2548. The House of Commons passed Theresa May’s Brexit bill that gives her the authority to invoke the Article 50 exit clause. Next stop is the House of Lords.

Crude oil prices rallied. WTI opened at $51.60/barrel and inched higher into the Energy Information Administration Weekly Crude Stocks data. The EIA reported a huge gain of 13.83 million barrels and traders shrugged it off. WTI rallied to $52.64/b because the large build was not unexpected and petrol inventories shrank.

Wall Street recovered from earlier losses and finished close to flat on the day. Intel (INTC: Nasdaq) had a photo-op in the Whitehouse to announce a $7.0 billion plant investment in Arizona.


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The Reserve Bank of New Zealand, based in Wellington (above), brought on a tumble in the NZ dollar through comments about the lofty status of the currency. Photo: Shutterstock


Opinion:

Forex traders should monitor their performance against a benchmark, writes TradingFloor contributor Fxtime in: Is your trading average?

– Edited by Robert Ryan

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