Fed Speeches Eyed, RBNZ Causes a Stir Overnight

It’s been another relatively quiet start to trading on Thursday, very much in keeping with what we’ve seen throughout the week so far with the absence of major economic data or events offering little direction for traders.

The only event of note so far today came from New Zealand where the central bank signalled its intention not to raise interest rates until 2019, catching traders off guard with markets having priced in at least one hike this year. It seems the Reserve Bank of New Zealand is not quite as optimistic on the outlook as markets were expecting and its belief that the currency remains overvalued will only dampen its views. The New Zealand dollar has pared some of its earlier losses but still remains off more than one cent against its US counterpart.

More active than it appears

Oil is trading up more than 1% on the day having recovered from its inventory-induced sell-off over the last couple of days. A huge inventory build over the last week, as reported by API and EIA, cast further doubts over whether efforts by OPEC and non-OPEC members to cut production will fully address the oversupply issue that has crushed oil prices in recent years. The re-emergence of US shale oil as prices have rebounded from their lows appears to be offsetting the cuts apparently being imposed as part of the production cut deal and questions are also surfacing about whether demand growth is as strong as expected. Still, oil is edging higher this morning despite all of this having reached the bottom of its trading range. Clearly it’s going to take more than a large inventory build to seriously test these lows.

Brent Daily

OANDA fxTrade Advanced Charting Platform

In general we continue to see plenty of caution in the markets which is likely attributable to the large amount of political risk and the unpredictability on Donald Trump is the early days of his tenure. Jobless claims is the only notable economic release to come today but we will also hear from Charles Evans and James Bullard, two Fed officials the first of which is a permanent voter on the FOMC. While markets have all but priced out a rate hike in March, it will be interesting to see if the Fed is on the same page.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

MS

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.