U.S. Session Forex Recap – Jan. 5, 2015

  • EUR and GBP take hits, while USD and JPY strengthen across the board
  • US manufacturing PMI drops to 53.9 vs. 54.0 expected, 53.7 previous
  • US ISM manufacturing PMI falls to 55.5 vs. 57.5 expected, 58.7 previous
  • US construction spending slips by 0.3% vs. 0.4% expected, 1.2% growth previous
  • USD/CHF reaches parity for the first time since November 2010

Talk about starting the year with a bang! High-yielding currencies had no chance against the Greenback, thanks to economic events heightening risk aversion among holiday forex market players.

The biggest story of the day was the euro, which took one-two punches from Mario Draghi and Angela Merkel. In an interview with a German newspaper, Draghi said that the ECB is in “technical preparations to alter the size, speed, and composition” of its programs in 2015, as the central bank is at risk of failing on its mandate to stabilize prizes. Meanwhile, German Chancellor Angela Merkel hinted that Germany would approve a Grexit if Greece’s opposition leader Alexis Tsipras wins and opposes austerity measures.

Not surprisingly, the euro took hits across the board. EUR/USD slipped by another 35 pips to a four-year low of 1.2004 while EUR/JPY dropped by 61 pips to 144.61. EUR/GBP shot up by 26 pips though, thanks to the pound having a worse day than the common currency. EUR/CHF’s price action, which was likely defended by the SNB, remained just above 1.2000.

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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