U.S. Session Forex Recap – Feb 4, 2015

  • US factory orders: -3.4% vs. -2.4% expected, -17% previous
  • CA raw materials price index: -7.6% vs. -9% expected, -5.7% previous
  • CA industrial production: -1.6% vs. -0.6% expected, -0.5% previous
  • Crude oil jumps by 7% on the day, encourages risk appetite
  • NZ Fonterra dairy prices rise by 9% from last auction
  • NZ unemployment rate rises to 5.7%, quarterly employment up by 1.2%
  • Greece proposes bond

Geronimoooo!!! It was a bad day to be a dollar bull yesterday, as forex traders priced in a couple of risk-friendly news events.

The dollar started the session on the red side of the charts thanks to Uncle Sam’s worse-than-expected factory orders data. It fell for a fifth straight month in December, thanks to weakening demand from Europe and Asia.

Adding to the dollar-selling vibes are reports of the new Greek government dropping its calls for a write-off in favor of swapping the debt for growth-linked bonds. Though creditors have yet to review the proposal, the news was enough to attract euro bulls.

EUR/USD is up by 136 pips (+1.20%) to 1.1483, EUR/JPY is up 177 pips (+1.33%) to 134.94, EUR/GBP shot up 41 pips (+0.55%) to .7570, and even EUR/CHF rose by 100 pips (+0.96%) to 1.0620.

The biggest story of the hour though, is the strong intraday recovery for oil prices. Though oversupply reports continue to hit the markets, investors also paid attention to major companies like BP who have announced their plans to cut capital expenditures. Brent crude oil closed with a 6% gain at $57.91 per barrel, while U.S. crude oil prices finished up by 7% to $53.05 per barrel.

The oil-related Loonie took advantage of the move. USD/CAD dropped by a whopping 177 pips (-1.41%) to 1.2396, CAD/JPY shot up by 148 pips (+1.59%) to 94.81, and EUR/CAD fell by 34 pips (-0.24%) to 1.4234.

The Loonie wasn’t the only comdoll gainer though. With dollar shorts getting squeezed across the board, even AUD/USD erased its post-RBA rate cut losses and climbed by 126 pips (+1.64%) to .7804. Last but not the least, an improvement in Fonterra’s dairy auction prices added another boost to the Kiwi and pushed NZD/USD 171 pips higher (+2.37%) to .7389 throughout the session. Yowza!

Will we see more comdoll gains today? New Zealand has just printed its quarterly employment numbers and, judging by the Kiwi’s spike higher, it looks like traders are paying more attention to the improvement in employment change than the uptick in unemployment rate.

China’s HSBC services PMI report is up at 2:45 am GMT after Japan’s average cash earnings report at 2:30 am GMT. Though these reports don’t usually cause sustained moves for the major currencies, watch for surprises that might affect the momentum of risk appetite across the markets.

Good luck!

See also:

London Session Recap

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