U.S. Session Forex Recap – Feb. 5, 2016

  • U.S. initial jobless claims at 285K vs. 279K forecast
  • U.S. Challenger job cuts up by 41.6% y/y in Jan
  • U.S. factory orders slumped by 2.9% in Dec vs. -2.5% forecast
  • FOMC member Mester: Still projecting four rate hikes this year

Another down day for the dollar! The U.S. currency had trouble getting back on its feet since economic data came in mostly weaker than expected. Can it recover this NFP Friday?

Major Events:

Weak U.S. data – Medium-tier reports from the U.S. economy fell short of expectations once more, leading forex traders to price in a potential downside surprise from the NFP. Initial jobless claims showed a larger than expected 285K increase versus the projected 279K reading and the previous 277K gain while Challenger job cuts jumped 41.6% year-over-year in January.

On the non-jobs front, the factory orders report showed a sharper than expected 2.9% drop for December versus the estimated 2.5% decline. This suggests that production might slow down as manufacturers adjust to weaker demand.

More oil-related chatter – It seems as though commodity traders are extra sensitive to any oil-related reports these days, as rumors of Turkey’s plans to invade Syria caused prices to spike. According to Russia’s Defense Ministry spokesman, they have serious grounds to suspect that Turkey is making intensive preparations for a military invasion of Syria, which might disrupt oil production in the region.

WTI crude oil surged past yesterday’s highs and came close to testing $33/barrel while Brent crude oil climbed to $34.50/barrel.

Major Currency Movers:

USD – The Greenback chalked up back-to-back losses against its forex peers, except for the British pound.

USD/JPY resumed its drop after a bit of consolidation around 118.00 to a low of 116.57, EUR/USD surged past the 1.1100 handle onto a high of 1.1239, USD/CHF retreated below parity to the .9940 area, and AUD/USD climbed to the resistance at the .7200 mark.

GBP – The British pound was in a weak spot after the Super Thursday events but it soon bounced back towards the end of the New York session.

GBP/USD struggled to hold its ground between 1.4550-1.4600, GBP/JPY sold off from the 174.00 area to a low of 170.04, GBP/AUD dipped to a low of 2.0147, and EUR/GBP was nearly unstoppable in its climb to .7700.

Watch Out For:

  • 12:30 am GMT: RBA monetary policy statement
  • 12:30 am GMT: Australia retail sales (0.5% expected, 0.4% previous)
  • 5:00 am GMT: Japanese leading indicators

See more:

Asian Session Recap

London Session Recap

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