U.S. Session Forex Recap – Dec. 11, 2014

  • US budget deficit at $56.8B in November vs. $65.0B expected, $135.2B previous
  • US weekly crude oil inventories pops up by 1.5M barrels vs. 2.2M barrels expected
  • RBNZ leaves rates at 3.5%, releases hawkish statements
  • AU employment numbers on tap

Volatility hunters had a good time during the U.S. forex trading session thanks to another bout of risk aversion and some profit-taking on the majors.

The only major report out during the session was the U.S. Federal budget balance. The deficit narrowed down in November, as spending fell and an improvement in employment helped boost government income.

The report didn’t do favors for the Greenback though. The dollar continued to lose ground against its major counterparts as investors continued to take profits from their long dollar positions. The low-yielding currency had started to decline as soon as the session started, but it was uptick in U.S. crude oil inventories and the resulting and decline in oil prices that set up the major currency pairs to test technical levels.

The comdolls were hit the most with AUD/USD declining by 49 pips to .8289 before popping up to .8325 at the last minute while USD/CAD, which priced in further declines in oil prices, shot up by another 26 pips to 1.1480. NZD/USD also weakened by 37 pips to a low of .7683 before a hawkish RBNZ statement boosted it all the way to the .7800 area. But more on that later.

The dollar wasn’t as lucky against its European counterparts. EUR/USD steadily rose by 66 pips to 1.2455 while GBPUSD shot up by 25 pips to 1.5712. USD/JPY got more attention though with its 105-pip drive to 118.02 as traders took profits from the previous weeks’ uptrend trades.

Let’s see if we can get more volatility today! New Zealand has already fired the first salvo when the RBNZ released a surprisingly hawkish monetary policy statement. Aside from hinting at higher interest rates, the central bank had also upgraded its growth forecasts. Japan has also released a weaker-than-expected core machinery orders report but so far it hasn’t moved USD/JPY or the other yen crosses significantly.

Will Australia’s jobs report provide a catalyst for some risk appetite? Analysts are expecting the Land Down Under to report a net of 15,200 new workers in November, lower than October’s 24,100 reading and possibly enough to push unemployment rate from 6.2% to 6.3%. Market players usually pay attention to jobs data as it could influence a central bank’s bias, so make sure you’re around when these numbers come out!

See also:

London Session Recap

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