U.S. Session Recap – March 14, 2014

  • US headline retail sales at 0.3% vs. 0.2% expected, previous months’ data revised lower
  • US initial jobless claims prints at 315K vs. 330K expected
  • US import prices at 0.9% vs. 0.5% expected
  • Ukraine prepares for “full-scale invasion”
  • Draghi jawbones the euro

It was a roller coaster day for the forex industry as the major currencies staged intraday reversals without clear catalysts.

Positive reports from Uncle Sam could have boosted risk appetite. Headline and core retail sales both came in better-than-expected although there were revisions to the previous month’s numbers. The initial jobless claims also surprisingly dropped to 315,000, lower than last week’s 324,000 figure and 330,000 claimants expected.

Unfortunately for the currency bulls, the markets were hit by a series of not-so-positive news that might not have affected price action as much on their own. For starters, a closer look at the retail sales report reveals that a lot of firms have downgraded their U.S. GDP estimates.

Then, Ukraine’s political struggles forced its way back into the forex grapevines. Russia is allegedly conducting a large buildup of troops near Ukraine’s border, enough for acting President Oleksandr Turchynov to start preparing for a “full-scale invasion” anytime. Yikes!

Mario Draghi also joined the bears’ party as he jawboned the euro. He said that while there are no inflationary risks at the moment, a low inflation still increases the probability of deflationary risks emerging. Because of that, the ECB has been preparing “additional non-standard monetary policy measures” and is “ready to take further decisive action if needed.”

What put the cherry on top of a sweet bearish sundae is a lot of technical levels that were too big to fail for the currency bulls. EUR/USD’s 1.3950 was a good point to sell at the time of Draghi’s speech; a breakdown of USD/JPY’s 102.70 fueled the pair’s losses, and GBP/USD’s 1.6700 area was a sweet spot to sell especially since there are no major catalysts scheduled from the U.K. until next week.

Only the comdolls were safe with Australia’s jobs report and the RBNZ’s hawkish remarks keeping AUD/USD and NZD/USD afloat at the .9000 and .8550 areas respectively.

Only the BOJ’s meeting minutes, the BOE’s quarterly bulletin, and Japan’s revised industrial production numbers are scheduled for release today. Will this mean a continuation of yesterday’s risk aversion or will another market-mover pop up and change risk sentiment today? Watch your trades closely!

See also:

London Session Recap

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