U.S. Session Forex Recap – June 8, 2016

  • Canadian Ivey PMI fell from 53.9 to 49.4 vs. 54.2 forecast
  • U.S. revised non-farm productivity down 0.6% as expected
  • U.S. revised unit labor costs up 4.6% in Q1

Forex price action during the U.S. session was as exciting as watching K-Stew act since there were no major reports on deck.

Major Events:

Revised U.S. labor data – Contrary to Fed head Yellen’s assessment that wage inflation and productivity growth remained weak, the revised labor market data for Q1 suggested that it wasn’t all that bad. Non-farm productivity was upgraded from an initially reported 1.0% decline to just 0.6% while unit labor costs were revised higher from 4.1% to 4.5% to indicate higher prices paid by businesses to workers.

Weak Canadian Ivey PMI – And it’s back to industry contraction, fellas! The latest Canadian Ivey PMI reading landed at 49.4 from its earlier 53.9 figure instead of rising to the consensus at 54.2. A closer look at the components of the report shows that the employment index fell from 49.9 to 49.3, hinting at potential weakness in the upcoming Canadian jobs release, while the inventories index tumbled from 52.3 to 49.6.

On a less downbeat note, the deliveries index returned to growth at 53.3 while the prices index jumped from 53.9 to 63.1, likely driven by the strong increase in crude oil prices for the past months.

Major Currency Movers:

CAD – The Loonie shrugged off weaker than expected Ivey PMI as it rallied on the heels of surging oil prices. WTI crude oil climbed to $50.50/barrel while Brent crude oil is up to $51.45/barrel.

USD/CAD initially spiked to a high of 1.2815 on the PMI release then resumed its drop to a low of 1.2734, CAD/JPY bounced off a low of 83.65 to a high of 84.32, AUD/CAD retreated from the .9540 area to retest support at .9500, and EUR/CAD broke below the 1.4500 handle to a low of 1.4475.

JPY – The Japanese yen resumed its climb against its forex rivals as risk-taking seemed to slow down in the financial markets.

USD/JPY turned from a high of 107.75 then fell to 107.11, EUR/JPY found resistance around 122.50 and is down to 121.80, GBP/JPY reversed upon hitting a high of 157.88 and is back to the 155.00 levels, and AUD/JPY is retesting support at the 80.00 mark.

Watch Out For:

  • 11:50 pm GMT: Japanese current account balance (2.04T JPY expected, 1.84T JPY previous)
  • 11:50 pm GMT: Japanese final GDP reading (upgrade from 0.4% to 0.5% expected)
  • 1:30 am GMT: Australian home loans
  • Tentative: Chinese trade balance (358B CNY expected, 298B CNY previous)
  • 5:00 am GMT: Japan’s Economy Watchers Sentiment index

See also:

Asian Session Recap

London Session Recap

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