U.S. Session Recap – February 20, 2014

  • Canada wholesale sales drops by 1.4% vs. 0.4% decline expected
  • US building permits clocks in at 0.94M vs. 0.98M estimates
  • US PPI rises by 0.2% vs. 0.1% expected
  • US housing starts at 0.88M vs. 0.95M expected
  • Fed’s Fisher and Plosser support the Fed’s tapering
  • NZ quarterly PPI slips by 0.7% vs. -0.9% estimates

What a roller coaster ride for the Greenback and the Loonie! Thanks to economic reports printed from both the U.S. and Canada, the two currencies got a lot of attention from the markets.

The Greenback started the session on the wrong side of the charts as Uncle Sam’s building permits and housing starts missed estimates. EUR/USD traded firmly above 1.3700 and GBP/USD had erased all of its post-unemployment report losses. But the bad vibes only lasted until the FOMC meeting minutes.

The report showed a mix of opinions from the central bankers but what traders paid attention to was the dissent of members Fisher and Plosser against more QE as well as the Fed’s conviction to taper at a measured pace. The support for tapering energized the bulls and encouraged intraday reversal for the Greenback. Equities traders didn’t like it, but the dollar bulls loved it.

USD/CAD was a different story though. The pair was already on its way up even before the FOMC minutes was released and eventually ended the US session 147 pips higher than its session open price. The catalyst? Canada’s wholesale sales numbers. It fell by 1.4% to 49.6 billion CAD in December, the third decline in four months and the lowest level in six months.

What made this report important is its positive correlation to the country’s retail sales data. The prospect of weak retail sales, coupled with the other disappointing Canadian data, didn’t sit well with the Loonie bulls.

Today we have other tier 1 reports coming up including China’s HSBC flash manufacturing PMI scheduled at 1:45 am GMT. The index is expected to remain at 49.5 like last month, but keep your eyes peeled for any surprises!

See also:

London Session Recap

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  • John

    Didn’t think the CAD wholesale numbers had such a huge effect. The economic calendar has it marked as “low impact”. Triggered my take profits on both AUD/CAD and NZD/CAD too early, I could have made soo many pips 🙁

    What is your take on the NZ quarterly PPI?

    • Pip Diddy

      Looks like it only had an impact on Kiwi during the Asian session. Did you enter at market instead for your AUDCAD and NZDCAD setups?

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