- US durable goods orders: 3.4% vs. 3.2% expected, -2.1% previous
- US core durable goods orders: 0.8% vs. 0.5% expected, -0.1% previous
- China’s equities market meltdown weighs on USD, comdolls
As if understanding the usual forex correlations isn’t hard enough, a plot twist popped up when concerns over China’s equities market weighed on the low-yielding DOLLAR. Wait, what?
The biggest story in the markets yesterday was the meltdown in China’s equities market. Chinese stocks fell by 8.5% throughout the day, its sharpest decline since 2007, on worries that the government is easing back its measures to stem the losses.
Strangely enough, it was the low-yielding dollar that took hits against its major counterparts. Some analysts point to strong euro zone reports while others say that the sharp decline in China’s equities market would somehow delay the Fed’s rate hike schedule. Though the latest Fed speeches and minutes barely talk about the China’s markets, the possibility was enough to lure some dollar bears from their hibernation.
EUR/USD registered another 26-pip hike (+0.24%) to 1.1094 during the U.S. session while GPB/USD popped up by 44 pips (+0.28%) to 1.5561. Meanwhile, USD/JPY stayed just above the 123.00 major psychological level near its intraday lows.
Of course, it’s possible that the European currencies simply had a good trading session. A strong German IFO report boosted the optimism from Greece working things out with its creditors while the pound’s oversold conditions from last week may have attracted some bulls.
In any case, EUR/JPY flew by 58 pips (+0.43%) to 135.76 while EUR/CHF rocketed by 85 pips (+0.80%) to 1.0682. Ditto for the pound, which registered a 63-pip increase (+0.33%) to 191.81 against the yen and a 96-pip win (+0.45%) against the Aussie.
The comdolls weren’t included in the Greenback selloff parade though. For one thing, their correlation to China’s commodity-buying market is stronger than their European counterparts. It also didn’t help that gold prices ended the day $6 down to $1,093 while WTI crude oil prices fell by another $0.99 to $47.16.
AUD/USD inched 13 pips (-0.18%) lower to .7275 while USD/CAD rose by 26 pips (+0.20%) to 1.3041. NZD/USD ended the session unchanged at .6608 after hitting an intraday high of .6639.
Asian session forex traders don’t have much to look forward to except for possible continuation of yesterday’s moves. There won’t be any major reports released over the next couple of hours, so keep close tabs on China’s markets and its possible impact on the major currencies.
Good luck and good trading!
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