U.S. Session Forex Recap – Apr. 7, 2015

  • US ISM non-manufacturing PMI: 56.6 vs. 56.6 expected, 56.9 previous
  • US Markit final services PMI: 59.2 vs. 58.6 expected and previous
  • CA IVEY PMI: 47.9 vs. 51.1 expected, 49.7 previous
  • AU retail sales: 0.7% vs. 0.4% expected, 0.5% previous
  • Will the RBA cut rates today?

The dollar bulls were back in action in yesterday’s U.S. forex trading session, as they erased most of its NFP losses last week.

With no major data from the European region and with most European traders out on Easter Monday holiday, it was easy for dollar bulls to gain momentum. It might have also helped that U.S. traders have started building their equities position again at the start of Q2 2015.

Uncle Sam’s reports also helped prop up the dollar. The final services PMI printed higher than markets had expected while the ISM report just met investor expectations.

The reports made it easy for analysts to remember that while the NFP report missed its expectations, unemployment rate actually steadied and average hourly earnings even ticked higher.

In any case, most of the major pairs gave up their intraday gains. EUR/USD encountered resistance at the 1.1035 handle and closed 67 pips lower (-0.61%) than its session open price. Ditto for Cable, which fell by 57 pips (-0.38%) to 1.4881 and USD/JPY, which saw a 46-pip jump (+0.39%) to 119.54.

Even the comdolls weakened against the Greenback. Anticipation for a possible RBA rate cut today made it easy for AUD/USD bears to drag the pair by 41 pips (-0.54%) to .7591 while NZD/USD also slipped by 51 pips (-0.67%) to .7542.

Surprisingly, the Loonie managed to keep its NFP gains against the dollar despite a weaker-than-expected Canadian IVEY PMI reading. USD/CAD barely reacted to the news and only hit an intraday high of 1.2507 before closing at 1.2482.

Let’s see if the comdoll bears were right to steer clear of high-yielding bets. A few hours earlier Australia had printed a better-than-expected retail sales report. The report hasn’t affected the Aussie’s price action much though, probably because Asian session forex traders are still waiting for the RBA’s monetary policy decision at 5:30 am GMT. Market players are generally expecting the central bank to keep its rates, though it’s not a done deal yet given the way it has kept its dovish bias in the last month.

A surprise rate cut could inspire significant intraday losses for the Aussie, so make sure you’re glued to the tube when the report is released. Also keep an eye on your other high-yielding currency bets, as today’s RBA decision could affect risk sentiment.

Good luck!

See also:

London Session Recap

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