U.S. Session Forex Recap – October 7, 2015

  • US trade balance: -48.3B USD vs. -48B USD expected, -41.8B USD previous
  • US IBD consumer optimism 47.3 vs. 44.5 expected, 42.0 previous
  • CA trade balance: -2.53B CAD vs. -1.2B CAD expected, -0.82B CAD previous
  • EIA raises 2015 world oil demand forecast by 170K barrels per day
  • NZ dairy prices: 9.9% vs. 16.5% previous
  • CA IVEY PMI: 53.7 vs. 54.0 expected, 58.0 previous
  • AU AIG construction PMI on tap
  • China’s markets still out on National holiday
  • BOJ’s monetary policy statement due

Risk appetite was the name of the game yesterday, as forex traders bought high-yielding assets and sold the Greenback across the board.

The straw that broke the dollar bulls’ backs was Uncle Sam’s trade deficit numbers, which ballooned from $41.8B to $48B in August and is expected to significantly weigh on Q3 2015 GDP. What’s worse is the weak data came on top of recent weaknesses in the NFP and ISM services PMI numbers.

Not surprisingly, the weak reports fuelled speculations that the Fed won’t hike rates in October (or at all in 2015). Recall that Fed members, most of them doves, are scheduled to give speeches this week. This is probably why Greenback bears found it easy to push the low-yielding currency lower ahead of said speeches.

USD/JPY ended the trading session 14 pips lower (-0.12%) to 120.19 while EUR/USD popped up by 52 pips (+0.46%) to 1.1279. Even GBP/USD, which has struggled with consecutive losses, zoomed 71 pips higher (+0.47%) to 1.5243. Last but not the least on the majors is USD/CHF, which fell by 76 pips (-0.78%) to .9666.

If you think those figures are amazing, then you haven’t seen the comdolls’ price action! Overall dollar weakness, improvements in commodity prices, and individual currency stories boosted the Aussie, Loonie, and Kiwi during the session.

First up is the Aussie, which found support from an uptick in gold prices and residual love after the RBA’s decision to keep its rates at 2.00% earlier in the day. Even the oil-related Loonie saw some gains after the EIA raised its oil demand forecasts for 2015. Lastly, the Kiwi popped up across the board following a decent dairy auction.

AUD/USD rose by 63 pips (+0.89%) to .7173 while AUD/JPY also popped up by 66 pips (+0.77%) to 86.22. Meanwhile, USD/CAD plummeted by 74 pips (-0.57%) to 1.3027 and CAD/JPY inched 44 pips higher (+0.48%) to 92.27. Lastly, NZD/USD zoomed 58 pips higher (+0.89%) to .6548 as NZD/JPY rocketed by 61 pips (+0.78%) to 78.71.

Will we see more dollar weakness today? Asian session forex traders will be busy despite the absence of China’s markets. Some time in the next couple of hours we’ll hear the Bank of Japan (BOJ)’s monetary policy decision. Market players aren’t expecting major changes from the central bank, though the latest disappointing reports from Japan could inspire policymakers to take a more cautious stance. Keep an eye out for the accompanying statement and signs of biases and/or future policy moves!

See also:

London Session Recap

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