U.S. Session Forex Recap – Oct. 28, 2014

  • US flash services PMI at 57.3 vs. 57.9 expected, 58.9 reading last month
  • US pending home sales up by 0.3% in September vs. 1.0% growth expected, 1.0% decline last month
  • Goldman Sachs cuts its oil price forecasts

Forex traders dropped the dollar like a hot potato, as they priced in weak U.S. data and some profit-taking ahead of the FOMC meeting.

Uncle Sam’s weaker-than-expected services PMI and pending home sales reports normally don’t affect the dollar’s price action significantly, but this time it fueled a bit of profit-taking ahead of Wednesday’s FOMC meeting.

If you recall, the Fed is scheduled to end its QE this month. The catch is that market players are now speculating that Yellen and her friends might either keep a token amount in the program or stress their plans of keeping rates tied to economic data and not to a schedule.

Of course, it also didn’t help that U.S. equities were on the fence for most of the session, and that U.S. 10-year yields fell by 1bps to 2.26%.

EUR/USD recovered from its London session lows and closed at 1.2706, 31 pips higher than its open price. GBP/USD also jumped by 31 pips to 1.6127 while USD/JPY was kicked 12 pips lower to 107.78.

The comdoll bulls weren’t as lucky, as they saw mixed performance against the Greenback. AUD/USD slipped by another 8 pips to .8805 while NZD/USD jumped by 26 pips to .7894. USD/CAD saw a tug-o-war between weak US data and falling oil prices before it eventually capped the session 4 pips lower than its session open price.

Will risk aversion take more pips from high-yielding comdolls today? We’re not expecting data from Australia or New Zealand today, but Asian session forex traders could watch out for Japan’s retail sales reports. Numbers released a few hours ago shows both the monthly and annualized retail sales figures exceeding market expectations. Is this why AUD/USD, NZD/USD, and some yen crosses are seeing some traction?

Keep close tabs on your trades today, in case we see a shift in risk sentiment!

See also:

London Session Recap

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