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

  • Philly Fed index jumped from -2.8 to +12.4 vs. -1.4 forecast
  • U.S. initial jobless claims at 265K vs. 267K estimate, 258K previous
  • U.S. JOLTS job openings climbed from 5.28M to 5.54M
  • U.S. current account deficit at $125B vs. $117B forecast
  • Canadian wholesale sales stay flat in Jan vs. +0.3% estimate
  • Draghi mentioned signs of economic improvement in Brussels testimony

After making strong moves earlier in the day, forex price action calmed down during the New York session as only medium-tier reports were released.

Major Events:

U.S. economic data – Medium-tier reports from the U.S. did very little to push dollar pairs in a particular direction, but it’s worth taking note of the results nonetheless. The Philly Fed index jumped from -2.8 to +12.4 for this month, outpacing the forecast at -1.4 and indicating a return to industry expansion.

Also on a positive note, the initial jobless claims figure came in slightly better than expected at 265K versus the 267K consensus. Meanwhile, the JOLTS job openings data for January revealed an increase from 5.28 million to 5.54 million, suggesting that there is no shortage of hiring opportunities available.

Only the current account balance didn’t land in the green as the deficit came in at $125 billion versus the projected $117 billion shortfall. In addition, the previous reading was downgraded to show a wider deficit of $130 billion from the initially reported $126 billion.

More risk-on vibes – U.S. equities closed higher once more, driven by risk appetite on the heels of the Fed’s decision to keep borrowing costs low and refrain from giving strong clues on future tightening moves.

A combination of other market factors kept this positive sentiment in play, among which was probably ECB head Draghi’s unscheduled testimony in Brussels, during which he mentioned that he is seeing signs of improvement in the economy. This followed the BOE’s not-so-dovish statement and meeting minutes, as well as the U.S. natural gas storage report which showed a decline in energy supplies.

Major Currency Movers:

GBP – While most forex pairs were stuck in consolidation during the U.S. session, the British pound was still busy squeezing out more gains after the BOE statement and minutes.

GBP/USD rallied from the 1.4425 area to a high of 1.4503 before cruising sideways, GBP/JPY popped up to a high of 161.58 after finding support at 160.75, EUR/GBP dropped to a low of .7809, and GBP/NZD recovered to the 2.1200 levels after testing 2.0950.

JPY – Yen pairs had an extra dose of volatility during the earlier part of the trading session, although BOJ officials claim to have absolutely nothing to do with it.

USD/JPY fell to a low of 110.67 before spiking right back up to a high of 111.80, EUR/JPY dipped to a low of 125.34 then surged to a high of 126.49 soon after, AUD/JPY fell to 84.30 then zoomed up to a high of 85.29 in just an hour, and CAD/JPY whipsawed from 85.00 to 86.00 before settling down.

Watch Out For:

  • 11:30 pm GMT: BOJ monetary policy meeting minutes

See also:

Asian Session Recap

London Session Recap

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