U.S. Session Forex Recap – Jan. 27, 2016

  • U.S. CB consumer confidence index up from 96.3 to 98.1 vs. 96.6 estimate
  • Richmond manufacturing index down from 6 to 2 in Jan
  • U.S. flash services PMI fell from 54.3 to 53.7
  • API crude oil inventories up by 11.4 million barrels
  • WTI crude oil above $30/barrel, Brent crude oil above $32/barrel

Another rebound in crude oil prices brought risk-taking back on the table, allowing higher-yielding currencies to advance against their safe-haven forex counterparts in the latter trading sessions.

Major Events:

Oil prices up again – After a weak start on Monday, crude oil quickly got back on its feet during yesterday’s European and U.S. trading sessions, convincing some investors that a recovery is taking place.

However, the latest report from the American Petroleum Institute revealed that stockpiles grew by 11.4 million barrels last week, indicating that oversupply issues are still present.

Mixed U.S. economic data – Dollar traders appear to be taking it easy ahead of the FOMC statement this week, especially since economic reports from the U.S. are giving mixed signals.

The CB consumer confidence index improved from 96.3 to 98.1, higher than the projected climb to 96.6, while the flash services PMI fell from 54.3 to 53.7 to indicate a slower pace of industry expansion. The Richmond manufacturing index was also weaker than expected, as it slipped from 6 to 2 in January.

SNB intervention? – The prospect of additional ECB easing in March seems to have spooked the folks over at the SNB, possibly leading them to intervene in the forex market. No one knows for sure if the Swiss central bank is up to something but it’s uncanny how the franc suddenly dropped to its lowest level against the euro since the SNB shocker last year.

Major Currency Movers:

USD – The Greenback lost ground against most of its forex counterparts, except for the franc and the yen, as risk sentiment improved and market watchers probably exited their long positions ahead of the FOMC statement.

USD/JPY bounced off a low of 117.66 to a high of 118.63, EUR/USD found support around 1.0820 and recovered to 1.0859, GBP/USD made a sharp rally from a low of 1.4174 to a high of 1.4366, and AUD/USD surged from a low of .6919 past the .7000 levels.

CHF – With no major reports out of the Swiss economy yesterday, market participants are speculating that SNB intervention may have been responsible for the franc’s sudden drop.

EUR/CHF popped up from its consolidation around 1.1000 to a high of 1.1059, USD/CHF rallied from a low of 1.0116 to a high of 1.0199, and GBP/CHF zoomed up by close to 300 pips from 1.4353 to 1.4650

Watch Out For:

  • 12:30 am GMT: Australian quarterly CPI (0.3% expected, 0.5% previous)

See more:

Asian Session Recap

London Session Recap

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