U.S. Session Forex Recap – Oct. 21, 2015

  • US building permits: 1.10M vs. 1.17M expected, 1.16M previous
  • US housing starts: 1.21M vs. 1.14M expected, 1.13M previous
  • CA wholesale sales: -0.1% vs. 0.2% expected, -0.1% previous
  • NZ Fonterra dairy auction shows prices falling by 3.1%
  • AU Westpac-MI leading index on tap

The dollar gained pips against most of its counterparts, as forex traders priced in individual currency stories and a bit of risk aversion.

It might have helped dollar bulls that yesterday’s U.S. building permits and housing starts numbers didn’t show big misses. The former clocked in a 1.10M reading after last month’s 1.16M figure while housing starts showed improvement with a 1.21M reading from last month’s 1.13M figure. FOMC members like Jerome Powell and Janet Yellen might have also contributed to the dollar’s strength when they didn’t talk about monetary policy in their scheduled speeches. Who needs more mixed signals, right?

The dollar easily gained pips against its low-yielding counterparts with USD/JPY popping up by 25 pips (+0.21%) to 119.89 while USD/CHF shot up by 54 pips (+0.57%) to .9567.

The European currencies also had trouble getting investor support. If you recall, the euro zone printed less-than-stellar reports in early London trading and still managed to gain some pips. Maybe the bears are catching up? EUR/USD dropped by 35 pips (-0.31%) throughout the session while EUR/JPY also slipped by 12 pips (-0.09%) to 135.94.

Though there were no catalysts to back the move, the pound also slipped across the board. GBP/USD found intraday resistance at the 1.5500 handle and dropped by 29 pips (-0.19%) to 1.5445 while GBP/JPY also fell from its 185.47 session high to close at 185.17.

The comdolls weren’t as consistent in their reaction against the Greenback. The Aussie erased most of the gains it has made following the RBA’s less-dovish-than-expected meeting minutes. AUD/USD dropped by 32 pips (-0.44%) to .7260 throughout the U.S. session.

Kiwi also fell across the board, though not without help from Fonterra’s latest dairy auction. The world’s largest dairy exporter showed that milk prices fell by 3.1% after showing price gains for four consecutive (two month’s worth) auctions. Though the dairy giant is expecting price to rebound as El Nino starts hitting production, NZD/USD still ended the session 81 pips (-1.19%) lower than its open price while AUD/NZD rose by 80 pips (+0.75%) to 1.0757.

Last but not the least is the Loonie, which found support from the Federal election results and a bit of recovery in oil prices. Say whuuuut?! As I mentioned yesterday, forex traders REALLY don’t like uncertainty around elections like these. But with Liberal Justin Trudeau securing enough seats to win a Parliamentary majority, market players are now expecting the ruling party to have little trouble passing their policies.

Will Asian session forex traders continue to punish the Aussie and Kiwi and push the Loonie higher? At 11:00 pm GMT we’re expected to see Australia’s leading indices. While these reports don’t affect the Aussie’s price action for long, any significant hits or misses from its previous figures could affect volatility and maybe even risk sentiment for the next couple of hours.

Good luck!

See also:

London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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