U.S. Session Forex Recap – Oct. 23, 2014

  • US headline CPI up by 0.1% in September vs. 0.0% expected, 0.2% decline last month
  • US core CPI up by 0.1% vs. 0.1% expected, 0.0% previous
  • CA headline retail sales down by 0.3% in August vs. 0.1% uptick expected, 0.1% decline last month
  • CA core retail sales also down by 0.3% vs. 0.2% uptick expected, 0.5% decline last month
  • BOC keeps rates steady at 1.0%, drops neutral bias
  • China’s flash HSBC manufacturing PMI on tap

The Loonie was the biggest headline maker during the US trading session, as forex traders reacted to Canada’s economic reports, the BOC’s decision, and a shooting in Ottawa.

The high-yielding comdoll started the trading session on the red side of the charts after Canada printed weaker-than-expected reports. Lower oil prices and a drop in motor vehicle sales weighed on gas receipts and dragged Canada’s retail sales by 0.3% in August after declining by 0.1% in the previous month.

The Bank of Canada (BOC) saved the Loonie’s day though, when it dropped its neutral bias in its monetary policy statement. The decision, together with hints that house prices and household debts are heating up, made market players believe that the BOC is getting ready to adopt a hawkish bias.

But the BOC is not done yet! Though BOC Governor Poloz canceled his quarterly policy speech due to a shooting near the central bank’s area, the details of the BOC’s forecasts left plenty of room for volatility. Aside from raising its 2014 growth estimates from 2.2% to 2.3%, the BOC also said that inflation has risen faster than expected due to sector-specific issues.

USD/CAD popped up to an intraday high of 1.1294 before ending the day at 1.1242, while CAD/JPY fell to a low of 94.97 before closing at 95.29. Similar moves were seen in EUR/CAD’s spike to 1.4303 before capping the session at 1.4215 and GBP/CAD’s hike up to 1.8110 before closing at 1.8045.

European currencies like the euro and the pound weren’t as lucky as the Loonie. As I mentioned in my London session update, the euro was plagued by concerns that as many as 11 banks would fail a stress test, while a not-so-hawkish BOE decision weighed on the Sterling. GBP/USD encountered resistance at the 1.6070 area before it fell to 1.6051, while EUR/USD dropped by another 56 pips to 1.2645.

Today’s Asian session calendar is a promising one for comdoll bulls and bears, with China’s HSBC manufacturing PMI scheduled at 2:45 am GMT. Analysts are expecting a 50.2 index reading like last month, but a significant miss in the number could set the trend for intraday comdoll or ever risk sentiment trading.

Good luck!

See also:

London Session Recap

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