Market performance changed dramatically in NY session yesterday. Shrugging of Germany's ban on short-selling, the euro rebounded strongly after plunging to a 4-year low against the USD. This triggered reversal in both stock and commodity markets.

There were several reasons driving the single currency's rebound. Apart from bargain-hunting, some believed that lack of support from other European countries regarding the short-selling restriction helped support the euro. After imposing the ban, German Chancellor Angela Merkel said that 'the lack of rules and limits can make behavior in financial markets driven purely by the profit motive destructive and lead to an existential threat to financial stability in Europe and even the world...The market alone won't correct these mistakes'. However, response from other Eurozone members was lukewarm. Many policymakers even cast doubts on the effectiveness of the policy and believed Merkel's move was mainly driven by domestic political agenda.

Another driver for euro' rally was SNB's intervention. Look at EURCHF, Swiss Franc plummeted -2.1% against the euro, fuelling speculations the SNB had intervened by selling the Franc. The central bank pledged in March 2009 to prevent gains of Swiss Franc against the euro.

The dollar got dumped after the Fed unveiled in the meeting minutes that policymakers saw no urgency in raising the policy rates. While economic outlook has improved, inflation remained subdued and unemployment stayed at elevated level. In fact, recent development in the Eurozone should make policymakers more cautious in adjusting their monetary stance. Low interest rates will likely be kept lower for longer.

Surge in the euro lifted market sentiment. WTI crude oil rebounded and closed at 69.87, up +0.66%, after plummeting to 67.9, the lowest since September 2009. Brent crude also recovered to 73.69 after falling to a 3-month low at 72.72.

The US Energy Department reported less-than-expected increase in crdue stockpile and decline in both gasoline and distillate stockpiles. However, the report did not catch much attention.

Crude oil inventory edged higher, by +0.162 mmb, to 362.7 mmb in the week ended May 14. The increase was lower than market expectations. However, Cushing stockpile also rose by almost +1 mmb.

Gasoline stocks fell -0.29 mmb as rise in production was offset by decline in imports, Demand fell slightly but should improve in coming weeks as we enter the driving season. Distillate stockpile drew as imports and production dropped -5.18% and -1.89% respectively. At the same time, demand soared +5.4% to 4.086M bpd during the week.

Gold's decline accelerated in NY session as risk appetite amid euro's strength. Settling at 1193.1, the benchmark contract has dropped -4% from the all-time high of 1249.7. Others in the precious metal complex also slumped with silver losing -4.05% to 18.115 and platinum sliding -5.02% to 1605.7. Palladium was the worst performer of the day as price slumped -9.33% to 459.7.