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

  • U.S. headline CPI up 0.4% vs. 0.3% forecast in April
  • U.S. core CPI posted 0.2% increase as expected
  • U.S. industrial production rose 0.7% vs. 0.3% consensus
  • U.S. building permits up to 1.12M, housing starts rose to 1.17M
  • Canadian manufacturing sales dipped 0.9% vs. expected 0.7% drop
  • New Zealand dairy prices up 2.6% in latest GDT auction
  • New Zealand PPI input prices down 1.0% vs. estimated 0.3% gain
  • New Zealand PPI output prices down 0.2% vs. estimated 0.4% gain
  • Japanese economy expanded 0.4% in Q1 vs. 0.1% forecast

Retreat, higher-yielders, retreat! The safe-havens claimed victory in the U.S. trading session, thanks to mostly stronger than expected U.S. economic figures.

Major Events:

Upbeat U.S. data – Uncle Sam painted the forex calendar green with a bunch of stronger than expected reports, keeping some traders hopeful that the Fed might hike rates sooner rather than later. Headline CPI posted a 0.4% increase versus the projected 0.3% rise while the core version of the report showed a 0.2% uptick as expected.

Industrial production also beat expectations with a 0.7% jump versus the 0.3% consensus while capacity utilization improved to 75.4%. Building permits climbed from 1.08M to 1.12M while housing starts rose to 1.17M, higher than the 1.12M forecast.

Mixed reports from New Zealand – Just before U.S. session traders were able to call it a day, New Zealand held its bi-weekly Global Dairy Trade auction and printed its quarterly PPI figures. The auction yielded a 2.6% rebound in dairy prices, making up for the previous 1.4% drop and suggesting that the industry is trying to stay afloat.

Meanwhile, producer input prices saw a sharp 1.0% drop in the first quarter instead of showing the estimated 0.3% uptick. Producer output prices recorded a 0.2% dip instead of the projected 0.4% increase. Components of the report showed that the declines were spurred mostly by weaker crude oil and energy products.

Major Currency Movers:

USD – The Greenback flexed its muscles against its forex peers, drawing strength from upbeat reports and hawkish remarks from a few Fed officials.

EUR/USD slid from a high of 1.1347 to a low of 1.1313, GBP/USD retreated from a session high of 1.4492 to a low of 1.4447, USD/JPY broke above the 109.00 handle to a high of 109.65, and USD/CHF is testing the resistance at the .9800 mark.

CAD – The Loonie tossed and turned during the New York session as it reacted to downbeat data and a drop in API crude oil inventories.

USD/CAD popped up to a high of 1.2955 then pulled back to a low of 1.2893, CAD/JPY retreated from the 85.00 levels to a low of 84.17 before recovering, EUR/CAD spiked to a high of 1.4647 then slumped back to 1.4600, and GBP/CAD made a quick turnaround from the 1.8750 area.

Watch Out For:

  • 12:30 am GMT: Australia MI leading index
  • 1:30 am GMT: Australia wage price index q/q (0.5% expected, 0.5% previous)

See also:

Asian Session Recap

London Session Recap

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