When the US after-market for oil opened early in our day yesterday, WTI and Brent opened around 6% down on Friday’s close, but those for the lows for the day with oil this morning trading very close to Friday’s close, even without a Doha agreement.  And that’s been the pattern for the commodity currencies that were sold at the opening, but since recovered that lost ground.  The AUD for example was trading in the mid to lower 0.76s yesterday morning but has since broken back up through 0.77 having traded through 0.7750 to and is only just below that level in early AM trade.  And so it was for the CAD and the NZD, the Kiwi not bruised by their Q1 CPI where the quarterly rise in prices was a tenth more than consensus.

The turnaround in oil looks to have come from a labour strike in Kuwait that has sidelined 1.7mbpd reducing global over-supply, for now anyway.  Workers have been protesting cuts to wages and benefits.  While many major producers had not planned to increase production anyway, Iran still looks like it is.

The push back up in the AUD was assisted by higher LME base metals prices at the start of the week, the LMEX index up 0.71%, copper by 0.41% and nickel by 2.52%.  Gold is little changed, while the iron ore price was back up in China again, up 3.57%, a rise of $2.08/t to $60.36/t.  Dalian iron ore futures rose 2.51% while Chinese steel rebar futures were up 3.14%, completing the loop.  We note that in yesterday’s Chinese property price report for March, a greater number of cities reported rising prices, with less reporting falls.

It was a quiet night for data.  The US NAHB Housing index for April that was steady at 58 with higher buyer traffic but lower current sales, signs that housing demand has lost a little of its stronger edge over recent months.

The NY Fed’s Bill Dudley (NY Fed President, NY always a voter and close to if not in the inner circle) gave remarks at the opening of a conference, Dudley still speaking of more monetary tightening but that they are likely to be gradual/ cautious with the US facing significant uncertainties.  A similarly cautious tone came from Dudley’s Minneapolis Fed colleague President Neel Kashkari (non-voter) who said the economy still is in unchartered waters with the dollar a factor for the US economy.  On that score, the Bloomberg spot dollar index is down 0.22% this morning, partly against the commodity/emerging market set, but with the EUR and GBP also doing better for once.

Coming up

There’s more Fed interest this morning at 9.00am AEST with Boston Fed President Eric Rosengren (voter) speaking.  That comes just after the NZ PSI Services index at 8.30 with the weekly ANZ-Roy Morgan consumer sentiment index at 9.30.  That’s followed by the RBA Minutes, superseded by last week’s strong local data. Any new words or discussion/ anxiety over the AUD’s consolidation in the mid-to higher 70s would also be of interest over and above the “complication” description in the Board’s Media Release.

Tonight in New York, Glenn Stevens speaks to the title “Observations on the Current Situation”, possibly a discourse on bringing the audience up to date on the economy’s transition after the resources construction boom.  Maybe a sound bite or two on the Aussie dollar, though nothing too audacious, we’d suggest.

There is the ZEW Investor Survey for EC and Germany tonight, as well as US housing starts and building permits that will refocus attention on the relatively better performing sector of the US economy.  There is also a global dairy auction tonight (L: 2.1%), as important as that is for NZ$ sentiment.

Overnight

On global stock markets, the S&P 500 was +0.70%. Bond markets saw US 10-years +1.93bp to 1.77%. On commodity markets, Brent crude oil +0.07% to $43.13, gold-0.0% to $1,234, iron ore +3.6% to $60.36. AUD is at 0.7749 and the range was 0.7747 to 0.775.

Good luck.

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• Markets Today: 19 April 2016 (PDF, 1MB)

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