U.S. Session Forex Recap – October 1, 2015

  • US ADP report: 200K vs. 190K expected, 186K previous
  • US Chicago PMI: 48.7 vs. 53.0 expected, 54.4 previous
  • US EIA oil inventories: 3,955K vs. -100K expected
  • CA monthly GDP: 0.3% vs. 0.2% expected, 0.4% in June
  • Japan’s Tankan indices show mixed results
  • AU AIG manufacturing PMI, China’s manufacturing numbers on tap
  • Chinese markets out on National Day holiday

The dollar failed to extend its gains against most of its counterparts despite an improvement in U.S. equities. Can’t really blame the dollar bears after the Chicago PMI report not only missed market expectations, but also fell to contraction territory.

Remember that a reading above the 50.0 mark signals industry expansion while a sub-50 reading means the industry is contracting. This is bad news for the manufacturing industry, which hasn’t been printing stellar numbers lately. Meanwhile, traders mostly ignored the better-than-expected ADP report even though its results could give clues to this Friday’s NFP report.

The dollar lost against its low-yielding counterparts with USD/JPY falling by 65 pips (-0.54%) to a session low of 119.57 before closing at 119.96 while USD/CHF also slid from its .9776 session high to close at .9744.

Even the European currencies were having a bad couple of hours. The euro and pound lost some of their early London trading gains, as Germany’s weak employment data and the euro zone’s surprisingly weak inflation numbers finally caught up to the common currency. Heck, the pound didn’t even get a breather from the bears as Cable clocked in its longest losing streak since August 2008.

EUR/USD lost 35 pips (-0.31%) to 1.1176 while EUR/JPY also slid by 71 pips (-0.53%) to 134.06. GBP/USD also fell by another 50 pips (-0.33%) to 1.5127 as GBP/JPY dropped by 100 pips (-0.55%) to 181.46. EUR/GBP didn’t show the tug-o-pip winner as it stayed around the .7380 area.

It was the comdolls that got some trader lovin’ thanks to an improvement in oil prices and end-of-quarter flows. Gold futures fell for the fourth consecutive day but comdoll traders still managed to push AUD/USD 9 pips higher (+0.13%) to .7019 and NZD/USD 17 pips up (+0.27%) ahead of China’s manufacturing reports.

The Loonie got a bit more than a few pips. Oil priced ticked higher at the beginning of the session and eventually got momentum, enough for Loonie traders to shrug off a big miss in Uncle Sam’s oil inventories report. Then again, we might also be seeing profit-taking after the Loonie took a lot of hits throughout Q3 2015.

USD/CAD fell by 65 pips (-0.49%) to 1.3346 while CAD/JPY jumped by 23 pips (+0.23%) to 89.88 while other yen crosses were falling. EUR/CAD also saw a 117-pip decline (-0.78%) to 1.4917.

Let’s see if today’s Asian session forex traders push the comdolls higher. China’s markets are out on National Holiday but we will see China’s manufacturing and non-manufacturing numbers at 1:00 – 1:45 am GMT. Market players are expecting China’s official manufacturing PMI to remain at 49.7 while the final Caixin manufacturing reading is expected to tick higher from 47.0 to 47.2. Meanwhile, the Caixin services PMI is expected to clock in at 51.2, down from last month’s 51.5 reading.

China’s reports have the tendency to affect risk sentiment, you can bet your pips that a lot of forex traders are watching these releases. Make sure you are, too!

See also:

London Session Recap

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