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

  • U.S. core durable goods orders up 0.4% vs. 0.3% forecast
  • U.S. headline durable goods orders jumped 3.4% vs. 0.3% estimate
  • U.S. initial jobless claims at 268K vs. 275K forecast
  • U.S. pending home sales increased 5.1% in April vs. 0.6% consensus
  • Fed official Powell: Hike may be appropriate “fairly soon”

All green! Economic data from the U.S. came in mostly stronger than expected, but the Greenback failed to take advantage of it.

Major Events:

Stronger than expected U.S. data – The durable goods orders report printed impressive results, as the headline figure surged 3.4% versus the projected 0.3% uptick while the core reading showed a 0.4% increase versus the estimated 0.3% gain. However, a closer look at the details of the report reveals that the jump in the headline figure was merely caused by a one-off rise in non-defense aircraft orders.

Pending home sales also beat expectations with a 5.1% jump in April and an upward revision from 1.4% to 1.6% for March. Meanwhile, initial jobless claims dipped to 268K from the earlier 278K figure, also coming in below the estimated 275K reading.

To top it off, Fed official Powell highlighted the green shoots in the U.S. economy during his testimony, adding that a rate hike may be appropriate “fairly soon.” However, he also noted that he needs to see significant economic strengthening this quarter to confirm this outlook and that a potential Brexit could pose risks to this view.

Crude oil retreats from $50/barrel– The commodity took a break from its recent climb, as traders likely booked profits at the $50/barrel levels ahead of today’s event risks, the long weekend in the U.S. and the OPEC meeting next week. WTI crude oil is down to $49.39/barrel and Brent crude oil retreated to $49.46/barrel.

Major Currency Movers:

USD – The U.S. currency returned some of its recent wins on weak underlying durable goods orders figures and profit-taking ahead of today’s catalysts.

EUR/USD popped up to a high of 1.1218 before settling just slightly below the 1.1200 handle, USD/JPY continued to tread carefully between 109.50 to 110.00, USD/CHF is stuck around the .9900 mark, and AUD/USD is up to .7225.

GBP – The pound carried on with its slide throughout the New York session, weighed down by weaker than expected U.K. data released earlier in the day.

GBP/USD retreated to a low of 1.4640, GBP/JPY found resistance at the 162.00 handle and is down to 160.90, EUR/GBP bounced off a low of .7583 to retest the .7625 broken support, and GBP/AUD fell to the 2.0300 handle after trading near 2.0500.

Watch Out For:

  • 11:30 am GMT: Tokyo core CPI (-0.4% expected, -0.3% previous)
  • 11:30 am GMT: Japanese national core CPI (-0.4% expected, -0.3% previous)

See also:

Asian Session Recap

London Session Recap

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