U.S. Session Recap – March 17, 2014

  • US PPI declines by 0.1% vs. 0.2% increase expected
  • US University of Michigan consumer sentiment falls to a 4-month low
  • China doubles the yuan’s trading band
  • Crimean residents vote to join Ukraine in referendum

The major currencies started the U.S. session on a weak note as investors continued to price in political concerns in Ukraine and economic concerns in China. It wasn’t until a few minutes into the U.S. session when the dollar started to get off its highs. You see, Uncle Sam’s PPI missed its expectations and the UoM consumer sentiment report clocked in a four-month low. It also helped the higher-yielding currencies that Russian Foreign Minister Sergei Lavrov denied possible intervention in Eastern Ukraine.

EUR/USD and GBP/USD had both popped up by 20-40 pips at the start of the session before capping the day higher than their open prices. USD/JPY took a hit though, and dropped to the 101.50 area where it ended the week. Meanwhile, the comdolls remained on their tight ranges as positive domestic data weren’t enough to overcome concerns over China’s growth.

We don’t have any major data on tap today save for the U.K.’s house price index and Australian new motor vehicle sales data. Still, watch out for other factors that might influence price action. Over the weekend the People’s Bank of China (PBoC) decided to DOUBLE the yuan’s trading band effective today. The Greenback is now allowed to move as much as 2% away from the central bank’s daily reference rate, up from the previous 1% allowance. The band was last widened in April 2012 when it was adjusted from 0.5% to 1.0%.

Another factor that could affect today’s trading is the results of Crimea’s referendum. Remember that under EU and US censure, Crimaeans are voting between remaining in Ukraine with greater autonomy or joining Russia. Half of the votes have already been counted and they reveal that 95.5% have opted to join Russia. Will this affect the investors’ risk appetite today?

See also:

London Session Recap

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