Market Drivers – US Session – Wednesday June 8

Mohamed Abdelhamid 9 June, 2022 3:06 am Commodities, Forex Market, Market Update

The US dollar suffered early in the US session as government bond yields temporarily dropped, later recovering some ground amid falling US equities.

Most major currency pairs are holding on to familiar levels, except for the USD/JPY pair, which surged to a fresh 20-year high of 134.47. The imbalance between the US Fed and the Bank of Japan boosted the pair as the BOJ confirmed its decision to maintain the country’s ultra-loose monetary policy.

Economic Data

US commercial crude oil inventories rose unexpectedly last week, while crude in the Strategic Petroleum Reserve (SPR) fell by a record amount as refiners’ inputs rose to their highest since January 2020, the Energy Information Administration said. Gasoline stocks fell by a surprise 800,000 barrels as demand for the fuel rose despite sky-high pump prices. Analysts polled by Reuters had expected gasoline stocks to rise 1.1 million barrels.

Wholesale inventories advanced 2.2%, instead of 2.1% as reported last month. Data for March was revised higher to show stocks at wholesalers rising 2.7% instead of the previously reported 2.3%. Economists polled by Reuters had expected April inventories would be unrevised. Wholesale inventories increased 24.0% in April on a year-on-year basis. Inventories are a key part of gross domestic product. Wholesale motor vehicle inventories rose 1.3% after accelerating 2.4% in March. Wholesale apparel stocks surged 6.4% after rising 4.0% in March.

Other Developments

Wall Street headed for faster decline during the final hours of trading after White House spokeswoman Karine Jean-Pierre said Biden’s administration expects the inflation numbers to be released at the end of week to be relatively high.

Gold advanced for a second consecutive day, but gains were tepid. The bright metal is currently changing hands at $1,853 a troy ounce.

The EUR/USD pair trades around 1.0710, while GBP/USD stands at 1.2540. The best performer was the Canadian dollar, as crude oil prices soared. The USD/CAD pair trades at around 1.2550 as WTI surged beyond $122.00 a barrel. AUD/USD gave up and settled just below 0.7200.

On Thursday, the focus will be on the European Central Bank. The ECB is set to announce the end of its stimulus program and keep key rates unchanged while hinting at a July lift-off, actually two steps behind most major central banks. European policymakers have been hinting at a 50 bps rate hike, but President Christine Lagarde inclines for a conservative 25 bps hike. Markets are choppy ahead of the event and ahead of fresh US inflation figures.

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