U.S. Session Forex Recap – August 13, 2015

  • US JOLTS job openings: 5.25M vs. 5.33M expected, 5.36M previous
  • US budget balance: -149.2B USD vs. -138B USD expected, -94.6B USD previous
  • EIA oil inventories: -1.7M vs. -1.6M expected, -4.4M previous
  • NZ business manufacturing index: 53.5 vs. 55.1 previous
  • NZ food price index: 0.6% vs. 0.5% previous
  • UK RICS house price balance: 44% vs. 42% expected, 40% previous
  • Commodities gain on USD selling
  • Japan core machinery orders, AU MI inflation expectations on tap

Geronimoooo!!! The dollar fell against its major forex counterparts yesterday after the PBoC performed a back-to-back devaluation of the yuan.

How could the PBoC’s moves hurt the dollar and not higher-yielding currencies? One possible explanation is profit-taking. Remember that long dollar trades had been building up for the past couple of months in anticipation of a September rate hike by the Fed. But with the second largest economy moving aggressively to defend its growth, some analysts are thinking that the Fed might push back its rate hike schedule until the waters are calmer.

Though Janet Yellen and her team haven’t expressed any direct concern over China’ s economy, the possibility of a rate hike delay was enough to inspire some profit-taking. Of course, it also didn’t help that yesterday’s reports missed market expectations.

The budget balance clocked in a deficit of 149.2B USD, wider than the 138B USD deficit expected. Job openings also reached 5.2 million in June, slightly less than the 5.3 million figure that analysts had been expecting.

The overall anti-dollar theme made it easy for high-yielding currencies, whose bearish stories have also been stretched out like a Kardashian TV episode, to get some of their pips back.

EUR/USD popped up by another 26 pips (+0.23%) to 1.1174 while GBP/USD saw a 30-pip uptick (+0.19%) to 1.5623. USD/JPY also fell to an intraday low of 123.79 before closing at 124.14.

A weak dollar also inspired gains among the major commodities. Gold found additional support from China’s recent yuan moves and rose by 3.5% to $1,123.20 per troy ounce. Meanwhile, oil bounced from its six-year lows after a U.S. oil stockpiles report came in weaker-than-expected.

The comdolls threw some punches with AUD/USD rising by 32 pips (+0.44%) to .7386 and NZD/USD inched 14 pips higher (+0.21%) to .6622. USD/CAD also fell by another 21 pips (-0.16%) to 1.2973 after hitting a 1.2952 intraday low.

Asian session forex traders have Japan’s core machinery orders data to price in today. The report, due at 11:50 pm GMT, is expected to show a 5.3% decline after last month’s 0.6% uptick. This will be followed by Australia’s MI inflation expectations report at 12:45 am GMT. A reading higher than last month’s 3.4% figure could extend the comdolls’ gains for the next couple of hours, so make sure you keep your eyes peeled for any significant hits or misses!

See also:

London Session Recap

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