The commodity complex came off the boil in the NY session and this led to a revival in the US dollar. The weekly oil inventory data showed a massive 2.9 million barrel build in the latest week (market was looking for a -1.5 million draw) and this helped push the oil imbalance back in the favor of supply for the first time in three weeks. Oil briefly tried below $65/bbl before recovering, but the damage was done.
The correlations witnessed over the last month or so were in full force and the commodity currencies bore the brunt of the weakness in crude. USD/CAD confirmed the hourly double-bottom by 1.0790 and squeezed through the 1.0970 neckline. Look for potential to 1.1150 before this is over. AUD/USD saw a similarly impressive decline of about -150 pips in the session. The pair found support at the 200-hour SMA by 0.7940 and was trying to sneak back above 0.8000 ahead of the close.
US dollar strength extended well beyond the commodity currencies. Cable saw an impressive -200 pip drop towards 1.6310/20 and was down about -400 pips on the day at one point. Below 1.6240 opens up potential for further weakness. EUR/USD shed a more modest -50 pips into the 1.4150/60 area. The 1.4100 level remains like a rock and contained the weakness once again. The immediate risk is for a squeeze higher towards 1.4200/50 ahead of tomorrow's ECB meeting. This, however, would set up a potential head-and-shoulders hourly consolidation. If this comes to fruition, then the ensuing 1.41 break could be ''lights out''.
The big story in stocks was that the S&P managed to stay above the 200-day SMA (923.30) today after an earnest attempt on the market's part to take the level out. The index squeezed higher at the end of the day but closed -1.4% in negative terrain nonetheless. The weakness here left the yen crosses heavy with EUR/JPY, for example, dipping -60 pips towards the 135.80/90 zone.
Upcoming Economic Data Releases (Asia Session) prior expected
6/3 23:50 GMT JN Capital Spending 1Q -17.30% -27.10%
6/3 23:50 GMT JN Capital Spending excl Sftwre 1Q -18.10% - -
6/4 1:30 GMT AU Trade Balance APR 2498M 1700M
6/4 2:30 GMT AU RBA Governor Stevens Speech in Townsville
6/4 3:00 GMT NZ ANZ Commodity Price MAY 2.50% - -
6/4 3:00 GMT NZ Commodity Price Index for May
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