Daily Financial Markets Update: Crude Oil Gains Spur Risk-Taking – Apr 7, 2016

Daily Financial Markets Update: Crude Oil Gains Spur Risk-Taking - Apr 7, 2016

The minutes of the March FOMC meeting showed that two policymakers voted to hike interest rates but majority noted that it would be prudent to wait for more data before tightening again. While inflation has picked up in the recent months, policymakers remain concerned that the trend might not be sustained.


On a more upbeat note, the Fed officials also acknowledged the strength in the employment sector and the housing industry. The also mentioned that even though global growth has slowed, the US economy remains resilient.


EURUSD popped up to a high of 1.4130, GBPUSD rallied from 1.4000 to 1.4170, USDJPY broke below 111.00 and 110.00 to a low of 109.31, and USDCHF is down to .9550.


Brexit concerns remain in play for pound pairs, preventing the UK currency from taking advantage of the pickup in risk appetite. GBPJPY is down to 154.50, EURGBP is testing the .8100 mark, GBPAUD is down to 1.8580, and GBPNZD is down to 2.0700 once more.


Commodity currencies advance on oil gains


Risk-taking took place when the Energy Information Administration showed a decline in US crude oil stockpiles of 4.9 million barrels. Analysts had been expecting to see a buildup of 3.1 million barrels after the rise of 2.3 million barrels in the previous week.


USDCAD found resistance at the 1.3200 levels and is down to 1.3075, CADJPY bounced off 83.50, EURCAD retreated to 1.4900, and GBPCAD fell upon hitting resistance at 1.8550.


The OPEC is set to have a meeting on April 17 to discuss a possible production cap. Earlier in the month, Iranian officials had been reiterating that they had no plans to cooperate since they are set to ramp up production to regain their market share. However, other OPEC members such as Kuwait expressed optimism about coming up with a production deal later this month.


Event risks for the day include speeches by ECB Governor Mario Draghi and Fed Chairperson Janet Yellen. The ECB meeting minutes are also up for release today and this should shed more light on the discussions to ramp up stimulus.


Talks of another Greek debt default by July are hitting the newswires after a leaked transcript of the meetings between the IMF and creditors prompted Greek PM Alex Tsipras to doubt that the negotiations can carry on in good faith. Meanwhile, Fed head Yellen is expected to reiterate her cautious bias and possibly lead to another round of dollar weakness.


To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.