U.S. Session Forex Recap – Feb. 18, 2016

  • U.S. headline PPI up 0.1% vs. -0.2% forecast, -0.2% previous
  • U.S. core PPI up 0.4% vs. +0.1% forecast, +0.1% previous
  • U.S. industrial production rose 0.9% vs. 0.3% estimate
  • U.S. building permits at 1.20M as expected, housing starts at 1.10M
  • FOMC officials outline downside risks in meeting minutes
  • New Zealand producer input prices down 1.2% in Q4 vs. +1.6% previous
  • New Zealand producer output prices down 0.8% in Q4 vs. +1.3% previous

The Greenback tossed and turned during the release of the FOMC minutes but ended the day mostly unchanged against its forex peers. Risk sentiment ruled in favor of the comdolls, though.

Major Events:

Strong U.S. economic data – Reports from the U.S. came in mostly stronger than expected, reassuring market watchers that the economy is on stable footing. Headline producer prices rose 0.1% instead of showing the projected 0.2% drop while the core PPI posted a 0.4% increase, higher than the estimated 0.1% uptick.

Industrial production also beat the consensus with a 0.9% rise compared to the estimated 0.3% increase. Meanwhile, building permits came in line with expectations of a 1.20 million reading while housing starts fell short at 1.10 million versus the projected 1.16 million figure.

FOMC minutes – Of course dollar traders held out for the release of the FOMC minutes in anticipation of more downbeat remarks from policymakers. As it turns out, most of the points included in the transcript were already shared by some committee members who gave testimonies recently.

While some Fed officials noted that there are increased downside risks to growth and inflation, majority maintained that a few more interest rate hikes are possible this year and that the economy can eventually achieve its 2% inflation target. Nothing we haven’t heard before!

More oil updates – Crude oil continued to advance in hopes of seeing any kind of agreement among oil-producing nations to stabilize prices, even after an Iranian official was quoted saying that it would be “illogical” for them to freeze production. A few OPEC members still tried to convince Iran to cooperate, but its oil minister simply said that they support the proposal by other members to put a cap on production. In other words, good for them, not for us.

Meanwhile, Libyan officials have also expressed their support for freezing production but they said that they’d like to increase their own levels first. So much for putting an output cap, huh?

Major Currency Movers:

CAD – The Canadian currency continued to ride along with the oil price gains, chalking up gains across the forex board.

USD/CAD tested the resistance around 1.3900 before falling to a low of 1.3686, CAD/JPY popped up from the 81.70 area to a high of 83.63, GBP/CAD continued to break lower and is now trading below 1.9600, and EUR/CAD is testing support at 1.5200.

AUD – The Aussie also managed to score a few wins of its own, taking advantage of dollar weakness and the pickup in risk appetite.

AUD/USD rallied back to the .7175 area after testing support at .7100, AUD/JPY bounced off 81.00 and climbed to a high of 82.06, EUR/AUD dipped to a low of 1.5749, and GBP/AUD is edging below the 1.9900 mark.

See also:

Asian Session Recap

London Session Recap

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