U.S. Session Forex Recap – July 23, 2015

  • Comdolls hit by rate cut, lower commodity prices
  • US FHFA house price index unchanged at 0.4% as expected
  • US existing home sales: 5.49M vs. 5.40M expected, 5.32M previous
  • US crude oil inventories: 2.5M vs. -1.7M barrels expected, -4.3M barrels previous
  • RBNZ cuts interest rates as expected
  • Greek Parliament passes second round of austerity conditions
  • AU NAB quarterly business confidence data on tap

It was a bad trading session for the comdolls, as they were hit with a one-two punch of dovish central bank comments and lower commodity prices.

The Loonie was under the spotlight after an oil inventory report showed a sharp increase when market players had been expecting a decrease. If you recall, the liquid gold had already taken hits at the prospect of Iran flooding the market with their oil exports.

Brent crude oil ended the day 1.2% lower to $56.24 while WTI dropped by 0.4% and went below $50. This is probably why the oil-related Loonie took some hits. USD/CAD jumped by 48 pips (+0.37%) to 1.3037 while CAD/JPY slipped by 20 pips (-0.21%) to 95.13 and EUR/CAD flew by 50 pips (+0.35%) to 1.4232.

The other commodity-related currencies weren’t in good shape either. The Aussie, still reeling from the RBA’s remarks that “further declines are necessary,” dropped by another 12 pips (-0.16%) against the dollar and 25 pips (-0.17%) against the euro. Meanwhile, anticipation of an RBNZ interest rate cut weighed on the Kiwi and dragged NZD/USD by another 13 pips (-0.20%) to 81.66.

The rest of the major currencies simply gave in to overall dollar strength. After all, at the end of the day the Fed is still the closest to tightening among the major central banks. Of course, it didn’t hurt that yesterday’s U.S. housing reports met investor expectations if not better-than-expected.

EUR/USD ended the session unchanged after dropping to an intraday low of 1.0870 while USD/JPY inched 19 pips higher (+0.15%) to 124.01.

Let’s see if risk aversion still prevails today. Asian session forex traders have a lot on their plate with the RBNZ just cutting its rates (as expected) from 3.25% to 3.0% with possibility of further rate cuts. Based on the Kiwi’s buy-the-rumor-sell-the-news reaction, I’d say investors had already priced in the decision.

The Greek Parliament is also entering the forex mix today with its decision to pass the second set of austerity measures that would help further discussions of more bailout from Greece. With a deal on the horizon, will this mean appetite for the euro and the other higher-yielding currencies over the next trading sessions?

Keep your eyes glued to your charts for any significant moves that might get extended or reversed until the next trading sessions!

See also:

London Session Recap

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