U.S. Session Forex Recap – Dec. 2, 2015

  • Canadian economy contracted by 0.5% in Sept vs. +0.1% forecast
  • New Zealand dairy prices up 3.6% in latest GDT auction
  • U.S. ISM manufacturing PMI fell from 50.1 to 48.6 vs. 50.6 forecast
  • FOMC member Evans: Prefers later liftoff but will keep open mind in Dec mtg.

Not a good day to be a dollar bull! Surprisingly downbeat ISM manufacturing PMI dragged the U.S. currency lower against its forex rivals, as doubts about a December liftoff surfaced.

Major Events:

Downside ISM manufacturing PMI surprise – Just when it seemed that the U.S. economy was seeing all green ahead of the much-awaited December FOMC meeting, the ISM manufacturing PMI for November turned out to be a major disappointment. The index fell from 50.1 to 48.6, its lowest reading since June 2009, instead of rising to the estimated 50.6 figure.

Components of the report showed that 10 out of the 18 industries in the survey indicated a contraction for the month, with the index for new orders slipping to its weakest point in over three years. On a more positive note, the employment component climbed from 47.6 to 51.3, setting the stage for an upbeat NFP release later this week.

Chinese yuan reserve currency status – More and more forex traders are acknowledging the potential positive impact of the Chinese yuan’s reserve currency status on global trade activity and commodities, allowing risk appetite to boost the higher-yielders in the past few hours.

Having the yuan as part of the IMF’s SDR or basket of world reserve currencies could open Chinese markets up for increased trading volumes, opening more growth opportunities for the world’s second largest economy and emerging nations as well.

Major Currency Movers:

USD & JPY – The U.S. dollar was down in the dumps in the latest forex trading session, giving up the most ground against the commodity currencies, and the lower-yielding Japanese yen also had a rough day.

EUR/USD is up 73 pips to 1.0636 (+0.069%), USD/CHF is down 20 pips to 1.0269 (-0.19%), USD/JPY is down 25 pips to 122.85 (-0.20%), and GBP/USD is up 28 pips to 1.5083 (+0.18%). EUR/JPY is up 64 pips to 130.66 (+0.49%) and GBP/JPY is flat at 185.31 (+0.01%).

AUD & NZD – The Aussie was one of the biggest winners of the day, thanks to upbeat central bank rhetoric and Chinese data coming in line with expectations, with the Kiwi following close by

AUD/USD is up 101 pips to .7328 (+1.41%), NZD/USD is up 104 pips to .6684 (+1.57%), AUD/JPY is up 108 pips to 90.03 (+1.22%), and NZD/JPY is up 113 pips to 82.11 (+1.39%). EUR/AUD is down 101 pips to 1.4512 (-0.69%), GBP/AUD is down 243 pips to 2.0579 (-1.17%), EUR/NZD is down 127 pips to 1.5910 (-0.79%), and GBP/NZD is down 289 pips to 2.2559 (-1.28%).

Watch Out For:

  • 12:30 am GMT: RBA Governor Stevens’ testimony. More upbeat remarks?
  • 1:30 am GMT: Australian quarterly GDP (0.7% expected, 0.2% previous)
  • 2:00 am GMT: FOMC member Brainard’s testimony

See more:

Asian Session Recap

London Session Recap

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