22 August 2016 at 22:42 GMT
US data released
As nothing days go, this was a blue ribbon one. The hawkish comments by Fed Vice Chairman Stanley Fischer, that dominated trading in Asia and Europe, appear to have met with a degree of scepticism by New York FX traders. USDJPY retraced all of its overnight gains and finished the day almost exactly where it closed on Friday. The same is true for EURUSD, which extended gains that were made in Europe.
Oil traders didn’t know whether to buy or sell so they did both. WTI dropped from $47.63 to $47.00 in the morning, bounced back to $48.00/b by lunch and then drifted down to $47.36/b by the close.
The oil price decline undermined the Canadian dollar making it the only G10 currency to lose ground against the US dollar during the New York session.
The common denominator in both FX and oil markets is confusion over the Fed’s interest rate intentions. Traders have not forgotten that the Fed set the stage for a rate hike in June and then closed the curtain on a move. Once bitten twice shy.
US equity traders appeared bored with it all. The major indices closed close to flat on the day.
The oil price bounced around during the day before settling at $47.36/barrel. Photo: iStock
– Edited by Gayle Bryant
Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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