U.S. Session Recap – August 8, 2014

  • ECB still waiting for the impact of previous decisions
  • ECB has stepped up plans to buy asset-backed securities (ABS)
  • ECB made no changes to inflation forecasts
  • US initial jobless claims: 289K vs. 304K expected and 303K previous
  • US 10-year Treasury yields falls to its lowest since June 2013
  • CA building permits up by 13.5% in June vs. 1.9% decline expected and 15.4% uptick last month
  • CA IVEY PMI: 54.1 vs. 53.0 expected and 56.9 last month
  • BOJ monetary policy decision and Chinese trade balance numbers on tap

Forex volatility during the US trading session was as watching water boil, as a mix of economic reports resulted to limited price action among the major currencies.

The euro initially dropped against its major counterparts after Mario Draghi hinted that the ECB has stepped up its efforts in considering more stimulus. While they’re still waiting for the impact of their previous decisions to hit the markets, they’ve also hired consultants specializing in asset-backed securities (ABS).

Fortunately for the euro bulls, traders eventually focused on the lack of changes to the ECB’s inflation forecasts and its plans to hold off any changes in policies for the time being. EUR/USD fell to an intraday low of 1.3337 before closing at 1.3365 while EUR/GBP also slipped by 17 pips to .7924 before ending the session at .7938.

The dollar also had a mixed day as investors priced in rising geopolitical tensions from the European region and growth concerns in the US. 10-year Treasury yields fell to 2.41%, its lowest level since June 2013, while the S&P 500 fell by 0.6% to 1,909.57. USD/JPY ended the session 23 pips lower than its open price while GBP/USD only slipped by 4 pips to 1.6837.

Even the comdolls were all over the charts against the Greenback yesterday. AUD/USD paused its intraday drop around the .9270 area while NZD/USD actually inched 13 pips higher to .8484. Meanwhile, not even Canada’s better-than-expected building permits report was able to offset risk aversion and concerns for the US economy. USD/CAD encountered support at the 1.0930 area before it started rising in the early Asian session trading.

Today’s another big day for the major currencies and it’s not just because the BOJ is set to release its monetary policy decisions and China is printing its trade numbers over the next couple of hours. The biggest headlines during the early Asian session trading is Obama’s decision to authorize air strikes in Iraq. Geopolitical tensions usually push the low-yielding yen higher, so it’s not surprising that the yen crosses are currently dropping like rocks.

Keep your eyes glued to the tube for any updates on Obama’s decision as well as the BOJ and China’s news releases in case they shape risk sentiment for the rest of the day.

See also:

London Session Recap

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