U.S. Session Forex Recap – Feb. 25, 2015

  • US S&P Case-Schiller home prices: 4.6% vs. 4.3% expected and previous
  • US consumer confidence: 96.4 vs. 99.5 expected, 103.8 previous
  • Eurogroup approves Greece’s list of reforms
  • Yellen: Fed in no rush to raise rates
  • BOC’s Poloz says January rate cut bought time
  • AU construction work done and wage price index exceeds expectations
  • Chinese HSBC manufacturing PMI on tap

What an exciting day for forex traders! Thanks to central banker speeches, there was no lack of currency volatility during the U.S. trading session.

The story of the hour was Fed Chairman Janet Yellen’s testimony to the Senate. While she is optimistic on the economy and inflation outlook, she also pointed out some downside risks. More importantly, Yellen stressed that the Fed is taking it on a “meeting by meeting basis,” and that a rate hike won’t necessarily follow when they remove “patient” from its statements. Talk about rate hike buzzkill!

U.S. equities and bond traders loved the rate hike delay, but the dollar bulls didn’t. EUR/USD inched 12 pips higher (+0.11%) to 1.1343 and USD/JPY plunged by 57 pips (-0.48%) to 118.89. It also lost against the comdolls with AUD/USD jumping by 66 pips (+0.85%) to .783 and NZD/USD rising by 40 pips (+0.54%) to .7487.

Another headline-maker was the Eurogroup accepting Greece’s reform proposals. Officials say that while they haven’t approved the reforms yet, they’re good enough for further discussion.

The news didn’t inspire much move though, probably because a bailout extension merely kicks the can down the road. It also didn’t help that the proposals drew flak from the ECB and IMF, with Christine Lagarde saying that the reforms need to be “more specific.”

EUR/JPY got weighed by the overall yen strength and dropped by 52 pips (-0.38%) to 134.85 while EUR/GBP slipped from an intraday high of .7329 to close at .7338 and EUR/CHF inched 26 pips (+0.24%) to 1.0782.

The Loonie also received nods from currency bulls after BOC Governor Stephen Poloz surprisingly laid to rest any rate cut speculations for next month. In a speech in Ontario, he said that last month’s rate cut “buys time to see how the economy responds.”

USD/CAD fell by a whopping 139 pips (-1.10%) to 1.2496 while CAD/JPY jumped by 61 pips (+0.65%) to 95.15 despite the overall yen strength. GBP/CAD also fell by 192 pips (-0.98%) to 1.9314 and EUR/CAD slipped by 146 pips (-1.02%) to 1.4172. Yowza!

Asian session forex traders are in for a potentially active day with China releasing its HSBC flash manufacturing PMI due at 1:45 am GMT. Analysts are expecting a slip from 49.7 to 49.5. Remember that a reading above 50.0 suggests industry expansion while any figure below the level suggests contraction. Watch your comdoll trades closely in case we see surprises!

See also:

London Session Recap

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