U.S. Session Recap – Sept. 23, 2014

  • Euro Zone consumer sentiment: -11.4 vs. -10.5 expected, -10.0 previous
  • Draghi says euro zone recovery has lost momentum
  • US existing home sales: 5.05M in August vs. 5.20M expected, 5.14M previous
  • Japanese markets out on Autumnal Equinox Holiday

Forex price action was generally muted during the US trading session, as investors waited for bigger potential market catalysts coming up this week.

Sales of previously-owned homes in the US unexpectedly declined by 1.8% in August, a first in five months. The dollar barely reacted though, with USD/JPY slipping by 27 pips to 108.77 and USD/CHF even inching 11 pips higher to .9400.

Mario Draghi was probably a bigger headline of the day. In a speech in Brussels, he said that euro zone’s recovery has lost momentum, and that unemployment remains unacceptably high. However, he also reminded that last their latest policy changes will complement their TLTRO, and that the ECB is ready to use more measures if necessary.

Not surprisingly, the euro barely reacted to Draghi’s non-news. EUR/USD inched 3 pips higher to 1.2850, EUR/JPY fell by 31 pips to 139.77, and EUR/GBP slipped by 12 pips to .7852.

The pound got more volatility throughout the session, as some investors piled back their investments after Scotland’s referendum. GBP/USD jumped by 30 pips to 1.6365, GBP/AUD took another 17-pip hike to 1.8433, and GBP/CAD rocketed by 88 pips to 1.8053.

Speaking of the Loonie, the comdoll got hit by comments of Bank of Canada (BOC) Deputy Governor Carolyn Wilkins. In her speech, the central banker estimated that the neutral rate of interest, or the rate at which the economy can function at full capacity with stable inflation, has dropped from 4.5% – 5.5% to 3.0% – 4.0% because of structural developments. She also hinted that “persistent headwind” might mean lower interest rates to keep inflation on target.

USD/CAD jumped by 35 pips to 1.1032, CAD/JPY plummeted by 51 pips to 98.61, EUR/CAD rose by 49 pips to 1.4175, and AUD/CAD climbed 43 pips to .9752. Yikes!

Today’s another potentially big day for the comdolls with China’s HSBC flash manufacturing PMI due at 1:45 am GMT. Analysts are expecting a reading of 50.0, down from last month’s 50.2 figure. A disappointing release could mean that the industry is contracting, so make sure you stick around in case we see volatile forex price action during the Asian session!

See also:

London Session Recap

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