U.S. Session Forex Recap – Oct. 10, 2014

  • US initial jobless claims: 287K vs. 295K expected, 288K previous
  • US wholesale inventories up by 0.7% in August vs. 0.3% growth expected and previous
  • Fed’s Fischer: rates will be data-driven
  • Fed’s Williams: “appropriate” to raise rates in mid-2015
  • Draghi: ECB ready to add more stimulus if needed, calls for structural reforms
  • CA new house price index up by 0.3% in August vs. 0.1% growth expected, 0.0% previous

“Started from the bottom now we here” was the dollar bulls’ jam during the US forex trading session, as they gained momentum following a couple of central banker speeches and a Goldman Sachs report.

Thanks to a better-than-expected initial jobless claims release, the Greenback started erasing its intraday losses almost from the start of the session. Wholesale inventories also came in at 0.7% in August, stronger than its flat reading last month. Not surprisingly, the reports attracted bargain hunters who are still pricing in a rate hike next year.

Goldman Sachs further fueled the dollar’s rally after they revised their 12-month dollar forecasts higher. It now expects EUR/USD to fall to $1.15 from $1.2 and USD/JPY to reach $115 instead of $110. It also expects similar gains against the Aussie, Loonie, and the Kiwi. Talk about a strong bias!

GBP/USD fell by a whopping 93 pips from the 1.6200 handle while USD/CHF saw a 64-pip run up to .9546. USD/JPY also inched 28 pips higher to 107.88, USD/CAD jumped by 68 pips to 1.1173, and NZD/USD dropped by 88 pips to 1.7856. Heck, AUD/USD even erased all of its intraday gains with an 89-pip slide to .8777!

Another headliner during the trading session was Mario Draghi, who repeated that the ECB will meet its inflation targets and that it’s ready to add more stimulus if necessary. He also added not-so-subtle hints to Germany, saying that structural reforms are needed in order for their policies to have a bigger impact.

While Draghi didn’t say anything new, his speech reminded traders that the ECB is still on easing mode while its counterparts like the Fed and the BOE are already contemplating tightening measures. EUR/USD plummeted by 85 pips to 1.2685 and EUR/JPY saw a 55-pip drop to 136.85 throughout the session.

We don’t have a lot of major forex events over the next couple of hours, so watch your dollar pairs closely to see if Asian session traders extend the Greenback’s rally.

If you’re really into news trading though, then you can wait for Australia’s new home loans report out at 12:30 am GMT, followed by Japan’s consumer confidence numbers at 5:00 am GMT. The home loans report is expected to rise by 0.2% after inching 0.3% higher last month, while Japan’s consumer confidence is predicted to print at 41.8, higher than last month’s 41.2 reading.

Good luck!

See also:

London Session Recap

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