U.S. Session Forex Recap – May 30, 2016

  • U.S. Q1 GDP upgraded from 0.5% to 0.8% as expected
  • UoM consumer sentiment index downgraded from 95.8 to 94.7 in May
  • Yellen: Rate hike appropriate in coming months
  • Yellen: U.S. economy is continuing to improve

All eyes and ears were on Fed head Janet Yellen, as her remarks were responsible for dictating dollar price action on Friday’s New York session.

Major Events:

Fed Chairperson Yellen’s speech – After several FOMC members shared their hawkish views in the past few days, forex traders had been waiting eagerly for the Fed head honcho herself to drop more clues on the central bank’s next policy moves. In Friday’s testimony, Yellen gave dollar bulls a reason to party in confirming that a rate hike would be appropriate in the coming months.

She explained that the U.S. economy is continuing to improve and that oil prices and the dollar are “roughly stabilizing.” She also highlighted the strength in the labor market but noted that wage inflation and productivity growth are still weak, reiterating that hiking too soon might cause a slowdown. Catch the rest of the highlights from Yellen’s speech in Forex Gump’s recap!

Mixed U.S. data – As expected the U.S. GDP reading was upgraded from 0.5% to 0.8% for the first quarter of the year, indicating that growth was not as feeble as initially reported. However, the price index for the same period fell from 0.7% to 0.6% to show a bit of downward pressure on inflation.

Meanwhile, the consumer sentiment index measured by the University of Michigan was downgraded from their preliminary 95.8 figure to just 94.7 in May, lower than the projected 95.7 reading.

Major Currency Movers:

USD – The Greenback got a pretty strong boost from Yellen’s words, as it scored considerable gains against the euro and the yen.

USD/JPY surged past the 110.50 minor psychological mark to a high of 110.86, EUR/USD fell from the 1.1175 area to test support at the 1.1100 major psychological level, GBP/USD turned upon hitting a high of 1.4671 to a low of 1.4608, and USD/CHF broke above its near-term resistance to a high of .9915.

JPY – Fans of lower-yielding currencies dumped the yen and flocked to the dollar, causing the Japanese currency to return some of its recent gains.

EUR/JPY bounced from a low of 122.25 to test the 123.00 handle, GBP/JPY found support near the 160.00 handle then rallied to 161.90, AUD/JPY climbed from a low of 78.90 to the 79.50 mark, and CAD/JPY is testing the resistance at 85.00 once more.

Watch Out For:

  • 11:50 am GMT: Japanese retail sales y/y (-1.2% expected, -1.0% previous)
  • 1:00 am GMT: Australia HIA new home sales
  • 1:30 am GMT: Australia company operating profits q/q (0.5% expected, -2.8% previous)

See also:

Asian Session Recap

London Session Recap

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