U.S. Session Forex Recap – Oct. 30, 2014

  • Fed ends QE3, highlights labor market strength
  • FOMC decision weighs on commodities and equities, boosts U.S. 10-year Treasury yields and USD
  • CA raw materials price index down by 1.8% in September vs. 0.8% decline expected, 2.2% drop in August
  • RBNZ makes no changes to its monetary policy

The Greenback flexed its muscles during the U.S. session, as forex traders priced in a decidedly hawkish FOMC statement.

If you’ve read Forex Gump’s trading guide, then you’ll know that market players had been expecting the Fed to hold back its hawkishness by emphasizing the “considerable time” it will take before it hikes its interest rates. Heck, some even speculate that the Fed will leave a token amount in its QE3 program to convey its cautiousness!

Instead of doing all that though, Janet Yellen and her gang decided to end the QE3 program as planned. And while they kept their “considerable time” language, they also downplayed their concerns on Uncle Sam’s low inflation and highlighted the improvements in the labor market. Officials noted the “solid job gains” and said that the slack in the labor market is “gradually diminishing.” Lastly, there was also no mention of global growth concerns possibly weighing on the U.S. economic recovery.

All the hawkishness was too much to resist for dollar bulls. EUR/USD dropped by 87 pips on the hour of the release before capping the session 94 pips lower than its open price.

USD/JPY also saw a 63-pip jump on the Fed’s decision before closing 73 pips higher than its session open price. GBP/USD, which was weighed by weak U.K. reports from the previous session, dropped by another 111 pips to 1.6006. Yowza!

Comdoll bears were also in full war mode thanks to weaker gold and oil prices adding fuel to the Greenback’s fire. AUD/USD closed the session with a 91-pip drop to .87988 after hitting an intraday high at .8912, while NZD/USD sustained a 123-pip drop to .7818. The Loonie, which didn’t get any help from Canada’s raw materials price index report, also saw a 78-pip decline against the dollar with USD/CAD hitting 1.1192.

See also:

London Session Recap

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