U.S. Session Forex Recap – September 4, 2015

  • US initial jobless claims: 282K vs. 275K expected, 270K previous
  • US initial jobless claims: 282K vs. 275K expected, 270K previous
  • US trade balance: -41.9B USD vs. -42.2B USD expected, -45.2B USD previous
  • US ISM non-manufacturing PMI: 59.0 vs. 58.2 expected, 60.3 previous
  • US final services PMI: 56.1 vs. 55.2 expected and previous
  • CA trade balance: -0.59B CAD vs. -1.2B CAD expected, -0.81B CAD previous
  • ECB lowers growth and inflation forecasts
  • Draghi hints at more QE through limit alterations
  • Gold down by 0.8% to $1,124.50 per troy ounce
  • China still on Victory Day holiday

Forex price action was once again mixed, thanks to risk sentiment, profit-taking, and economic reports all factoring in market players’ decisions.

The biggest story of the hour was the Draghi’s press conference following the ECB’s decision to keep its monetary policies unchanged. The triple roundhouse kick to the euro started with the central bank cutting its growth AND inflation forecasts for 2015.

It lowered its 2015 growth estimates from 1.5% to 1.4% in 2015 while the economy is now expected to rise by 1.7% (down from 1.9%) in 2016. Meanwhile, consumer prices are expected to rise by only 0.1% in 2015, 1.5% in 2016, and 1.7% in 2017.

The next hit for the euro came from Draghi, who announced that the ECB has tweaked its QE rules to increase the percentage of individual bond issues the central bank can buy from 25% to 33%. The move itself isn’t exactly detrimental to the euro, but it did send the message that the ECB is ready and willing to spend more to stimulate the economy.

The cherry on top of the euro bears’ sundae was the ECB head honcho hinting that while they’re not making big changes to their QE program, its duration might be extended beyond September 2016. Duhn duhn duhn.

Not surprisingly, the euro fell across the board. EUR/USD dropped by 109 pips (-0.97%) to 1.1125 while EUR/GBP plummeted by 60 pips (-0.82%) to .7293 despite the pound also experiencing some weakness during the session. EUR/JPY also saw a 161-pip dive (-1.19%) to 133.46 while EUR/CHF slipped by 65 pips (-0.60%) to 1.0829.

The Greenback also saw some action after Uncle Sam printed some decent reports. The initial jobless claims hardly showed any changes while the ISM non-manufacturing PMI, final services PMI, trade balance report, and Challenger layoffs numbers all printed to the upside. Coupled with the overall risk aversion from Draghi’s dovish speech, the dollar saw gains in the early U.S. trading session. Unfortunately for the low-yielding currency though, its gains petered out near the end of the day as a lot of traders closed their trades ahead of today’s NFP report.

GBP/USD hit an intraday low of 1.5220 before capping the day at 1.5254 while USD/JPY lollygagged just below the 120.00 handle. Even USD/CHF fell from an intraday high of .9770 to close at .9734. The comdolls did a little bit better with USD/CAD slipping by 69 pips (-0.52%) to 1.3195 and NZD/USD popping up by 45 pips (+0.71%) to .6392.

Asian session forex traders don’t have a lot on their plates with no major reports on tap and China still out on a bank holiday. Then again, we might see limited volatility anyway ahead of the NFP report. Best look at your charts closely, mark potential trade setups, and make trading plans while we wait for the big event!

See also:

London Session Recap

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