U.S. Session Forex Recap – July 1, 2016

  • Canadian economy expanded by 0.1% in April as expected
  • U.S. initial jobless claims at 268K vs. 267K forecast
  • Chicago PMI rose from 49.3 to 56.8 vs. 50.6 forecast
  • BOE Governor Carney: Likely to add stimulus in summer
  • BOE to consider a “host of other measures” aside from rate cuts
  • Carney: Uncertainty could remain elevated, economic outlook deteriorated

The U.S. dollar was slowly sliding lower against its forex peers until BOE Governor Carney stepped up to the podium and started talking stimulus.

Major Events:

Economic reports from Canada – The Canadian economy expanded by 0.1% in April as expected, lifted by gains in the manufacturing, utilities, and public sector. Components of the GDP report revealed that activity in the mining, quarrying, and oil and gas extraction sectors was down 1.4% – its third consecutive monthly decline.

Leading inflation reports suggested upward pressure on overall price levels, as the raw materials price index jumped 6.7% versus the 4.9% forecast while the industrial product price index rose 1.1% versus the projected 0.4% uptick.

Economic reports from the U.S. – Unlike most other manufacturing PMI readings, the Chicago PMI printed stellar results as it rose from 49.3 to 56.8, outpacing the consensus at 50.6 and showing a stronger than expected return to industry expansion. Meanwhile, initial jobless claims came closely in line with expectations by rising from the earlier week’s 258K reading to 268K.

BOE Governor Carney’s speech – A week after the EU referendum resulted in a Brexit, BOE Governor Carney confirmed speculations that the U.K. central bank would be cutting interest rates to keep the economy afloat. In his latest testimony, he said that uncertainty could remain elevated following the decision to leave the EU and that their economic outlook deteriorated.

Because of that, the BOE head honcho shared that they’re likely to add stimulus in summer, which should be around the next policy statement in July 14. He also mentioned that they’re considering a “host of other measures” aside from rate cuts.

Major Currency Movers:

GBP – The British pound returned most of its recent gains when BOE Governor Carney confirmed that further stimulus is on the table.

GBP/USD found resistance near the 1.3500 handle then dropped more than 300 pips to a low of 1.3195, GBP/JPY fell from a high of 138.72 to the 136.00 handle, EUR/GBP bounced off .8275 then rallied to a high of .8382, and GBP/AUD hit new lows at 1.7744.

 

Watch Out For:

  • 12:30 am GMT: Australia AIG manufacturing index
  • 12:30 am GMT: Japanese household spending (-1.3% expected, -0.4% previous)
  • 12:30 am GMT: Tokyo core CPI (-0.5% expected, -0.5% previous)
  • 12:30 am GMT: National core CPI (-0.4% expected, -0.3% previous)
  • 12:50 am GMT: Tankan manufacturing index (4 expected, 6 previous)
  • 12:50 am GMT: Tankan non-manufacturing index (19 expected, 22 previous)
  • 2:00 am GMT: Chinese official manu PMI (50.0 expected, 50.1 previous)
  • 2:00 am GMT: Chinese official non-manu PMI (53.1 previous)
  • 2:45 am GMT: Chinese Caixin manu PMI (49.1 expected, 49.2 previous)
  • 3:00 am GMT: Japanese final manu PMI
  • 6:00 am GMT: Japanese consumer confidence index

See also:

Asian Session Recap

London Session Recap

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