U.S. Session Forex Recap – Dec. 1, 2014

  • CA Q3 2014 GDP up by 2.8% vs. 2.1% expected, 3.6% uptick in Q2 2014
  • CA monthly GDP up by 0.4% as expected vs. 0.1% decline previous
  • CA raw materials price index down by 4.3% vs. 2.5% decline expected, 2.1% decline previous
  • CA PPI down by 0.5% vs. 0.4% downtick expected, 0.3% decline previous
  • Brent crude oil drops to lowest since 2010

And the dollar bulls are back at it! Fresh from the Thanksgiving holidays, U.S. forex traders went back to full dollar-buying mode as they caught up to last week’s economic themes.

Uncle Sam didn’t release any economic report last Friday, so it was easy for traders from the U.S. to price in the OPEC decision that they missed during the Thanksgiving holidays.

WTI crude fell by $7.54 to $66.16, Brent crude oil dropped below $70 per barrel, something that hasn’t happened since 2010, and gold slipped by $23 to $1167.

Not surprisingly, the Greenback took advantage of the risk-off mode. The euro erased all of its intraday gains with a 43-pip drop to 1.2440 and GBP/USD resumed its slide with a 62-pip drop to 1.5639. Meanwhile, USD/JPY shot up by another 40 pips to 118.67 and USD/CHF inched 32 pips higher to .9660.

The Loonie also saw some action thanks to Canada’s GDP report and the extended decline in oil prices. A lot of traders focused on oil weakness but Canada’s better-than-expected quarterly GDP was enough to support the comdoll against some of its counterparts.

Canada’s Q3 2014 growth was slower than in Q2 2014, but still beat market estimates. Exports and household spending pulled up the report with the former growing by 1.4% on increased demand from the U.S. and a weaker local currency.

CAD/JPY ended the session 3 pips higher than its open price while the Aussie, Kiwi, and the pound ended the session almost unchanged against the Loonie after gaining around 50 pips at the start of the session. The Canadian dollar didn’t have a chance against the Greenback though, as overall dollar strength pushed USD/CAD 35 pips higher to 1.1438.

Will we see more dollar gains today? The first Asian forex trading session of this NFP week promises to be an interesting one, with Australia already releasing its MI inflation gauge and quarterly company operating profits and Japan printing its capital spending numbers. More importantly though, we’ll also see China’s manufacturing PMI numbers at 1:00 am GMT, followed by the HSBC final manufacturing PMI at 1:45 am GMT.

The former is expected to slip to 50.5 from a reading of 50.8 last month while the latter is expected to remain at 50.0 like last month. Significantly weaker readings could inspire risk aversion and further weigh on high-yielding currencies like the comdolls. This could also mean more dollar strength at the start of the week. Make sure you keep an eye on these reports in case we see the beginnings of week-long currency trends!

See also:

London Session Recap

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