U.S. Session Forex Recap – October 6, 2015

  • US ISM services PMI: 56.9 vs. 57.5 expected, 59.0 previous
  • US final services PMI: 55.1 vs. 55.7 expected, 55.6 previous
  • US equities, bond yields gain on lower Fed rate hike prospects
  • NZ NZIER business confidence: -14 vs. 5 previous
  • China’s markets still out on National holiday
  • AU trade balance on tap
  • RBA expected to keep interest rates at 2.00%

The dollar’s price action was as mixed as the colors of my socks, as forex traders priced in moves in U.S. equities and a bit of risk appetite.

Yesterday the U.S. ISM non-manufacturing PMI clocked in its slowest pace in three months, which isn’t exactly a red flag after July’s strong performance. Heck, even the disappointing read on the final services PMI failed to faze the bulls!

What got more attention from forex market players was the strong performance of U.S. equities and U.S. bond yields. S&P 500 rose for a fifth session in a row, its longest streak this year, while the Dow also climbed by 1.9% throughout the day. These suggest that last Friday’s weak NFP reading only served to dampen rate hike expectations and not optimism over Uncle Sam’s growth.

The Greenback gained against some of its major counterparts with EUR/USD falling by 45 pips (-0.40%) to 1.1184 while GBP/USD slipped by 30 pips (-0.20%) to 1.5152. Even the low-yielding currencies gave up pips to the dollar with USD/JPY inching 21 pips higher (+0.18%) to 120.44 while USD/CHF rose by 20 pips (+0.21%) to .9755.

The dollar wasn’t as lucky against the comdolls. Gold futures extended its gains on overall dollar weakness while a rally in U.S. gasoline and Russia’s willingness to discuss oil with other major producers boosted U.S. crude oil prices up by 1.6% to $46.26 per barrel. A little bit of risk appetite in the markets also didn’t hurt.

AUD/USD ended the session unchanged after hitting a session low of .7057 while USD/CAD fell by another 37 pips (-0.28%) to 1.3085. NZD/USD also stayed near its session open prices after rising strongly in the earlier trading sessions. If you recall, expectations of a strong dairy auction and a bit of profit-taking had boosted the Kiwi across the board.

Let’s see if the comdolls gain any more ground against the Greenback. China’s markets are once again out on a holiday, but we do have a bunch of Australian reports on tap. The first salvo will come from Australia’s trade balance report, which is expected to come in at -2.4B AUD after showing a deficit of 2.46B AUD last month.

We probably won’t see any sustained moves from the Aussie though, at least not until the RBA prints its interest rate decision at 3:30 am GMT. Market geeks are expecting the central bank to hold its rates at 2.00% though Governor Glenn Stevens is also expected to give an accompanying statement to the decision. Keep an eye out for any biases or hints at future policy decisions, will ya?

See also:

London Session Recap

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