Currency markets held to relatively narrow ranges in NY trading on Tuesday, while commodities saw some heavy selling early on, only to recoup most of the losses by the end of the day. The USD weakened initially on a larger than expected US Feb. trade deficit (-39.7 bio vs. exp. -38.5 bio and prior -37.0 bio), which was driven wider by an increase in imports. In reaction to the trade report, USD/JPY dipped from 93.00 to the overnight range lows around 92.50/60, while EUR/USD gained from around 1.3580 and tested the range highs near 1.3620/25. But heavy commodity selling provided the buck with some support, leading the USD to recover and eventually re-visit its overnight range highs at 93.20/25 and 1.3550/55. Markets reversed yet again in the NY afternoon, as commodities recovered and the USD slid back toward the day's lows.

Oil prices led the way lower among commodity markets after the International Energy Agency revised higher its forecasts for non-OPEC supplies and ahead of weekly US inventory data on Wednesday that may show another increase in oil stockpiles. The IEA said countries like Canada and Russia may increase daily output by as much as 600,000 barrels, or 220,000 barrels more than estimated just last month. WTI crude oil fell from about $84.00 to a low near $82.50 on record trading volume. Crude later rebounded to close around $84.00/bbl after managing to regain key trend line support for the current advance at around $82.75/bbl. Gold prices also came under pressure in early NY trading, falling from about $1155/oz. to a low near $1145/oz, before rebounding to finish out near $1151/oz.

In other data, Canada reported a larger trade surplus in February (+1.4 bio vs. exp. +0.6 bio and prior +0.8 bio), while the April US IBD/TIPP Economic Optimism index exceeded expectations for an improvement (48.4 vs. exp. 47.5 and prior 45.4). US stock markets meandered for most of the day, but managed to eke out a tiny gain by the end of the day (S&P 500 +0.1%). Coming up in Asia, NZ Feb. retail sales (retail sales ex-autos exp. +0.4% MoM; prior +0.3%) and Australian April Consumer confidence (last +0.2%) are the highlights.