Oil has hit a 15-month high on the back of optimism over the Opec deal which needs to be sorted out by November 30. But, with a record long position building across the combined benchmarks, a disappointment could leave some exposed. Full report to come within the hour....
Article / 05 October 2016 at 21:42 GMT

US Market Wrap: Oil and data keep FX traders busy

FX Consultant / IFXA Ltd

  • Japan: Foreign Investment 2350 GMT 

US data released 

  • ADP Employment (Actual 154,000 vs. forecast 175,000) 
  • Trade Balance August (Actual -40.7 billion vs. forecast -39.3 billion) 
  • ISM Non-Manufacturing PMI August (Actual 57.1 vs. forecast 51.9) 
  • Factory Orders August (Actual 0.2% vs. forecast -0.1%) 
  • EIA Crude Stocks change (Actual -2.97 million barrels vs. forecast -2.68 m/b) 

There was plenty of US data available for traders to sink their teeth into but they didn’t appear to be interested. At least that was the case for EURUSD traders. The single currency started the session at 1.1230 and drifted lower. The ISM data led to a quick (but shallow) and short lived, spike lower. The 1.1188-1.1230 trading range says all that needs to be said.

USDJPY was a different roll of sushi. Better-than-expected US data, more of the same hawkish rhetoric from Fed speakers (including Richmond Fed President Jeffrey Lacker, again), a befuddled Bank of Japan and a rising risk of a US rate hike, drove USDJPY from 102.85 to 103.65.

After punching to a new post-Brexit and 35-year-low in Europe, GBPUSD sellers took a breather, allowing sterling to drift higher until mid-afternoon. Hard-line UK/European Union negotiations may lead to a hard landing for the British pound.

Oil prices rallied. Yesterday’s API report of a 7.6-million-barrel decline in US crude stocks wasn’t a fluke. Today, the Energy Information Administration reported a 3-million-barrel drop in crude inventories. WTI opened $49.30 and rallied to just below $50.00/b ($49.94) before drifting lower into the close.

US equity indices recouped yesterday’s losses in part because traders liked the strength of today’s economic data.

 No pipedream. Oil prices hit session highs on Wednesday after the EIA reported
another surprise weekly drawdown in crude inventories. Photo: iStock


When there is nothing going on in FX markets, that doesn't mean there isn't any trading opportunities, writes Trading Floor contributor fxtime in his article: When nothing appears, trade it.

– Edited by Gayle Bryant

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
engage with Saxo Bank's social trading platform.

Missed a day? Here’s what we had to say during our and our Asia session our regular European Morning Markets, From the Floor and Mid-session Europe.


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