U.S. Session Recap – June 26, 2014

  • US final GDP estimate shows 2.9% decline for Q1 2014, worst in five years
  • US durable goods orders slips by 1.0% in May vs. 0.1% decline expected and 0.6% uptick in April
  • US core durable goods orders down by 0.1% vs. 0.3% expected and 0.4% previous
  • Obama administration starts to lift 40-year ban on oil exports

The dollar bulls and bears were all over the markets yesterday as Uncle Sam printed its final GDP reading. The report surprisingly showed a 2.9% decline in Q1 2014, which is the worst reading in five years. Analysts say that weak healthcare spending, inventories, and bad weather had weighed on growth during the quarter.

The durable goods data also fueled the dollar bulls early in the session when it printed a full 1.0% decline in May when market players had only priced in a 0.1% slip. Not surprisingly, USD/JPY fell by around 30 pips to 101.60 while EUR/USD and GBP/USD shot up by the same degree to 1.3652 and 1.7005 respectively when the reports were released.

The bad vibes didn’t last long though, and the Greenback soon regained most of its losses as market players speculated that the GDP, a lagging indicator, had already been considered by the Fed in its recent decisions. By the end of the session EUR/USD was only up by 19 pips at 1.3629, GBP/USD was ahead by 6 pips at 1.6980, and USD/JPY was only down by 5 pips at 101.87.

Unlike the European currencies, the comdolls weren’t as forgiving on the Greenback. AUD/USD shot up by 31 pips in the first hour of the report and ended the session with a 36-pip gain. NZD/USD also locked in a 34-pip gain at .8733 while USD/CAD slipped by 17 pips to 1.0722.

We don’t have to search far and wide for reasons over the comdolls’ rallies. Yesterday the Obama administration had had allowed Dallas-based Pioneer Natural Resources and Houston-based Enterprise Products Partners to export condensate, an oil that can be refined into motor or jet fuel. This marks as the first time that U.S. companies are allowed to export crude since the Arab oil embargo 40 years ago and opens up possible income opportunities for commodity-related companies.

We don’t have any major data scheduled during the Asian forex trading session so keep your eyes peeled for possible continuation of U.S. session moves. Also, watch the news wires closely in case we see any surprise catalysts that might influence risk appetite.

Good luck and good trading!

See also:

London Session Recap

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