U.S. Session Forex Recap – May 19, 2015

  • US NAHB house price index: 54.0 vs. 57.0 expected, 56.0 previous
  • Canada on Victoria Day bank holiday
  • Tsipras, Varoufakis, hint that Greece is “close to a deal” with creditors
  • NZ PPI input and output expected at 11:45 pm GMT
  • RBA meeting minutes on tap
  • RBNZ inflation expectations report due today

Dollar domination, baby! Thanks to a mix of minor forex market movers, the dollar clobbered its counterparts during the U.S. session.

There was no single big story throughout the trading session, though analysts are pointing to a bit of risk aversion dragging government bond yields of other major economies and making U.S. Treasury yields more attractive.

EUR/USD dropped by a full 97 pips (-0.85%) to 1.1309 and GBP/USD stayed below the 1.5700 mark while USD/JPY popped up by 31 pips (+0.26%) to 120.00 and USD/CHF rose by 68 pips (+0.74%) to .9257.

German bund yields took a step back yesterday when word got around that Greece is out of cash and might not be able to pay its 1.5 billion EUR debt due in June. Greece PM Tsipras and Finance Minister Varoufakis were quick to react (but not quick enough), as they hinted that they’re close to getting deals with the creditors.

EUR/JPY fell by 82 pips (-0.60%) to 135.70, EUR/GBP dropped by 52 pips (-0.72%) to .7225, and EUR/AUD lost 83 pips (-0.58%) to 1.4163.

Forex traders might have also been wary over buying the pound before the inflation report is released today. If you recall, in the BOE’s last inflation report the central bank not only cut growth forecasts, but also said that it’s expecting inflation to dip below zero in the coming months. Yipes!

Aside from Cable not making headways above the 1.5700 handle, GBP/JPY was also unable to rise above 188.00 while GBP/AUD lollygagged around the 1.9600 area.

Last but definitely not the least is comdoll price action, which showed more dollar strength. USD/CAD rose the most in two months with a 110-pip spike (+0.90%) to 1.2164 despite the lack of any remarkable action in oil prices. Talk about taking advantage of Canadian traders out for the holidays!

AUD/USD also fell by 21 pips (-0.26%) to .7985 while NZD/USD dropped by 44 pips (-0.59%) to .7378.

Will the dollar also dominate the Asian forex trading session? The RBA’s latest meeting minutes is due at 1:30 am GMT, followed by the RBNZ’s inflation expectations report at 3:00 am GMT. Central bank-related reports are always closely watched by forex traders, so you might want to pay attention to these releases too. Any hints of dovishness is a drag on the currency, while hints of optimism usually push currencies higher.

Good luck!

See also:

London Session Recap

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