U.S. Session Forex Recap – Oct. 3, 2014

  • ECB holds monetary policy as-is; no hints of new plans of asset purchases
  • U.S. Weekly Initial Jobless Claims better-than-expected: 287K vs. 297K forecast, 295K previous
  • U.S. Factory Orders m/m weaker: -10.1% vs. -9.5% forecast, 10.5% previous

After strong moves during the Asia and London trading session, forex volatility calmed down a bit and became choppy during the U.S. session.  This was most likely due to the lack of major tier one news events, which does include the decision by the ECB.  This event turned into snoozer as the held monetary policy as-is, and the press conference lacked of details for their future asset purchase operations.

The lack of news was temporarily bullish for the euro, which has been in a strong bear market for quite some time now, the reaction showing how oversold conditions may be at the moment for the euro. After a short-term spike in volatility, the euro slowly marched higher after the press conference, with EUR/USD hitting highs just under the 1.2700 before the move was faded going into the end of the U.S. session.

The Japanese yen saw a big reversal not too long after the London session close as the risk aversion (sparked by geopolitical risks and Ebola fears in the U.S.) may be overdone.  USD/JPY found a bottom right at the 108.00 handle, where forex traders began buying back up yen pairs, a move that seems to be finding further momentum here in the Asia trading session. USD/JPY is now only 15 pips away from the 109.00 handle, EUR/JPY has broken above Thursday’s highs (now trading around 137.75), and AUD/JPY seems to be ready to retest Wednesday and Thursday highs around 95.80.

Speaking of the Aussie, we just got Australia’s AIG Services PMI data at 12:30 am GMT, coming in weaker at 45.4 vs. 49.4 previous.  This is another weak read in a broad trend of weakening PMI data from around the globe, but the Aussie seems to be holding up well at the moment. AUD/USD is only down 10 pips on the Friday session, trading just under the .8800 handle.

With no further economic news until the London trading session, look for technicals and intraday trends to influence price action, and maybe a drop in volatility as forex traders head to the sidelines the closer we get to the U.S. Non-Farm Payrolls event, later at 1:30 pm GMT.

See also:

London Session Recap

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