U.S. Session Forex Recap – Mar. 10, 2015

  • CA housing starts: 156K vs. 179K expected, 187K previous
  • USD takes a step back as U.S. equities and European currencies inch higher
  • NZ credit card spending: 1.0% vs. 0.4% expected, -0.4% previous
  • AU NAB business confidence, Chinese inflation on tap

With no major data to cause significant movements, forex volatility depended on risk sentiment and a bit of profit-taking.

The dollar gave back a couple of pips to its counterparts after last Friday’s big moves. If you recall, traders had bought the dollar like there was no tomorrow last Friday after the NFP report supported earlier-than-expected rate hike speculations from the Fed.

This time the spotlight was on risk appetite. The ECB has started buying bonds as part of its QE program and risk-takers loved it. European and U.S. equities inched higher with S&P 500 closing 0.4% higher to 2,079.43, DJIA rising by 0.8% to 17,955.72, and NASDAQ jumping by 0.2% to 4,942.44. Meanwhile, the pound got a breather from forex bears as traders priced in potential hawkish statements from BOE officials’ speeches this week.

EUR/USD only slipped by 8 pips (-0.07%) to 1.0852, GBP/USD saw a nice 22-pip (+0.15%) rise to 1.5128, and USD/JPY jumped by 24 pips (+0.20%) to 121.15.

The pound’s gains was particularly notable as it gained pips across the board. GBP/JPY registered another 64-pip hike (+0.35%) to 183.28 while GBP/AUD rocketed by 89 pips (+0.46%) to 1.9641 and EUR/GBP fell by 17 pips (-0.24%) to .7173.

The comdolls weren’t as lucky against the dollar. China’s better-than-expected trade data failed to support commodity-related currencies as it revealed that its imports had actually gone down in February. It also didn’t help that forex traders are expecting dovish statements (if not rate cuts) from the RBA and RBNZ over the next few meetings.

AUD/USD saw a 24-pip decline (-0.31%) to .7702 while NZD/USD slipped by 11 pips (-0.15%) to .7356 and USD/CAD inched 4 pips higher (+0.03%) to 1.2605.

Will Chinese data support the comdolls this time? China is set to print its CPI data at 1:30 am GMT and market players are expecting an annualized rate of 1.0% from the previous month’s 0.8% uptick. A significantly lower number could support claims of China’s economic slowdown and further weigh on the comdolls. On the other hand, a better-than-expected read could help stem risk aversion flows among comdoll bears.

Good luck and good trading!

See also:

London Session Recap

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