U.S. Session Forex Recap – Jan. 25, 2016

  • Canada’s Dec headline CPI down by 0.5% vs. -0.4% forecast
  • Canada’s core CPI down by 0.4% vs. -0.3% forecast
  • Canadian Nov headline retail sales up by 1.7% vs. +0.3% estimate
  • Canadian core retail sales up by 1.1% vs. +0.4% estimate
  • U.S. flash manu PMI rose from 51.2 to 52.7
  • U.S. existing home sales up from 4.76M to 5.46M vs. 5.21M forecast
  • Japanese trade surplus widened from 0.02T JPY to 0.04T JPY

Risk-takers, unite! Forex traders didn’t show much love for the safe-haven currencies towards the end of the week, thanks to the strong rebound in oil prices. Has the selloff bottomed out?

Major Events:

Return of risk appetite? – Apart from the strong rebound in commodities, global equities also managed to chalk up strong gains at the end of the week. In the U.S., the S&P 500 index closed 2.03% higher while the Nasdaq logged in a 2.66% gain.

It also helped that economic data from the U.S. came in stronger than expected, with the flash manufacturing PMI up from 51.2 to 52.7, outpacing the consensus at 51.5. Existing home sales surged to 5.46 million, higher than the previous 4.76 million reading and the estimated 5.21 million figure.

Canadian retail sales up, CPI down – Economic reports from Canada came in mixed, as consumer spending looked robust in November while the December CPI figures fell short of expectations.

Headline retail sales jumped by 1.7% versus the projected 0.3% increase while core retail sales rose 1.1% versus the estimated 0.4% growth. Meanwhile, the headline CPI indicated a 0.5% slump in price levels while the core CPI showed a 0.4% drop. Components of the December CPI report revealed that falling transportation costs were mostly responsible for the drop in price levels.

 

Major Currency Movers:

CAD – The Canadian dollar spent another day rallying against most of its forex peers, buoyed by the pickup in oil and strong retail sales figures.

USD/CAD edged lower to the 1.4150 minor psychological mark, CAD/JPY continued to make its way past the 83.00 handle onto a high of 84.09, EUR/CAD broke below support at 1.5300 and reached a low of 1.5273, and GBP/CAD dipped to a low of 2.0137.

USD & JPY – The lower-yielding U.S. dollar and Japanese yen gave up more ground to its forex counterparts throughout the day, as risk appetite stayed in play. Hey, that rhymes!

GBP/USD popped up to a high of 1.4363, AUD/USD pulled up to a high of .7046, NZD/USD tested the resistance at the .6550 minor psychological mark, GBP/JPY surged all the way up to the 170.00 levels, AUD/JPY made its way to the 83.00 handle, and USD/JPY is currently hovering around 118.56.

 

Watch Out For:

  • 12:30 am GMT: Australian NAB business confidence index

See more:

Asian Session Recap

London Session Recap

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