U.S. Session Forex Recap – Apr. 21, 2015

  • BOC’s Poloz: latest rate cut seems sufficient, greatest risk might be strong US economy
  • RBA’s Stevens: rate cuts remain possible, Aussie “very likely” to fall further
  • Greek PM Tsipras orders local governments to hand over funds to the central bank
  • RBA monetary policy meeting minutes on tap

With no major data on the docket, forex traders turned to central banker speeches for direction. Which way did the major currencies go?

The biggest mover among the major currencies was the Aussie, which took hits after RBA Governor Stevens hinted at future rate cuts and predicted a lower local currency. In his speech, he said that interest rates should be accommodative so rate cuts should still be on the table. Given his bias, he also said that he’d be surprised if the Aussie doesn’t see more short-term weaknesses. Yikes!

AUD/USD dropped by 50 pips (-0.64%) to .7723 while AUD/JPY fell by 43 pips (-0.47%) to 92.1. Heck, even GBP/AUD shot up by 108 pips (+0.56%) and EUR/AUD rocketed by 93 pips (+0.67%) to 1.3905!

Stevens wasn’t the only one under the spotlight. BOC Governor Steven Poloz also hit the news wires and helped support the Loonie by saying that the central bank’s January rate cut seems sufficient to put the economy back on track. His optimistic comments supported the BOC’s less dovish tone last week, and hinted that we won’t see any more rate cuts from the central bank in the near future.

USD/CAD fell by 57 pips (-0.47%) to a session low of 1.2230 before settling back up to 1.2230 while CAD/JPY shot up by 53 pips (+0.55%) to 97.77 before closing at 97.50.

The last but definitely not the least mover is the euro, which was weighed by news of Greek PM Tsipras ordering the local governments to hand over its funds to Greece’s central bank. The move is expected to bring in about 2 billion EUR. Unfortunately, it also highlights Greece’s limited options to get more funding and increases the odds of a Greek debt default.

The euro gave back some of its early London session gains with EUR/USD falling from its 1.0768 session high to close at 1.0738 while EUR/GBP slipped from a high of .7721 to .7201 and EUR/JPY inching lower from its 128.47 high to 128.06. The cherry on top of the euro bears’ sundae was EUR/CHF hitting a low of 1.0236, its lowest in 2015. Duhn duhn duhn duhn.

Thanks to Stevens’ speech, Asian session forex traders will pay close attention to the RBA’s meeting minutes on tap at 2:30 am GMT. Watch out for any dovish comments or hints of future rate cuts! The only other report on the docket is Japan’s final reading of its leading indicators report due at 6:00 am GMT. It doesn’t usually have sustained impact on the yen pairs, so keep your eyes peeled for other reports that might affect risk appetite.

Good luck!

See also:

London Session Recap

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