U.S. Session Recap – June 19, 2014

  • Fed tapers its asset purchases by another $10 billion
  • Fed downgrades 2014 growth forecasts but upgrades employment and inflation estimates
  • US current account deficit widens from 87.3 billion USD to 111.2 billion USD in Q1 2014
  • CA wholesale sales up by 1.2% in April vs. 0.5% expected

What a bloodbath for the Greenback! With Uncle Sam’s CPI numbers printing strong numbers, market players had expected Janet Yellen and her gang to lighten up about their economic biases. For example, analysts had expected higher growth, inflation, and employment forecasts as well as some hints of future rate hikes.

Instead, the Fed upgraded its inflation (1.5%-1.7% from 1.5%-1.6% in March) and employment (6.0% – 6.1% jobless rate from 6.1% – 6.3% in March) forecasts but DOWNGRADED its 2014 growth forecasts from 2.8% – 3.0% to 2.1% – 2.3%. Not only that, but the central bankers’ statements also hinted that they’re happy with the current tapering pace and aren’t expecting a rate hike at least until 2015.

The dollar fell across the board with EUR/USD jumping by 22 pips to 1.3585 throughout the session, GBP/USD clocking in a 44-pip gain to 1.6988, USD/JPY falling 25 pips to 101.96, and USD/CHF slipping 15 pips to .8967.

Rising gold, oil, and dairy prices also propped up the comdolls against the Greenback. For those who aren’t fans of fundamental analysis, you should know that the Fed’s disappointing statement inspired flight to the higher-yielding commodities with crude oil getting extra support from geopolitical tensions in the East.

AUD/USD ended the session 56 pips away from its tight range at the .9338 handle while NZD/USD also jumped by 57 pips to .8726. The Loonie also snuck in gains with USD/CAD slipping 23 pips to 1.0849.

New Zealand’s newly-released quarterly GDP report as well as the RBA’s quarterly bulletin will be under the spotlight in today’s Asian session trading. Growth in New Zealand clocked in at 1.0% in Q1 2014 vs. 1.1% expected, but so far traders are taking the numbers in stride. Look out for other catalysts that might affect forex price action today!

See also:

London Session Recap

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