US crude supplies registered another big drop this week. The Energy Information Administration reported that supplies fell by 4.2M barrels to 24 June a much bigger drop than the 184,000 barrels that oil analysts had forecast.
The greenback traded on relatively solid ground today despite a mixed set of economic data. The dollar was up against the yen and the euro but slipped versus the UK pound and fell sharply against the Canadian dollar.
Commodities took another beating today after China’s main stock index the Shanghai Composite plunged by 8.5%. The Chinese authorities have staged a massive intervention in recent months to try to stabilize the stock market.
The yen rallied in the wake of an IMF report on Friday. The IMF warned that Japan should prioritize its reform program again popularly called “abenomics” and not to rely on a weaker yen to solve its economic stagnation.
Commodity currencies were trading nervously in the run up to an announcement from the RBNZ’s monetary policy committee. New Zealand’s reserve bank is widely expected to lower rates by 25bp to 3.0% today.
The Australian dollar notched up a second day of rises against the greenback today. AUD/USD propelled upwards towards 0.7435 taking the level well clear of the deep low of 0.7327 that was reached last week.
The RBA will release the minutes of its last meeting later tonight. There is also a speech by bank head Glenn Stevens which is scheduled later tonight. These events will be closely watched for any change in sentiment as well as the economic outlook.