U.S. Session Forex Recap – July 6, 2016

  • U.S. factory orders down 1.0% vs. projected 0.8% drop
  • U.S. IBD/TIPP Economic Optimism index down from 48.2 to 45.5
  • New Zealand GDT auction yielded 0.4% decline in dairy prices

The Greenback left its forex peers eating dust, thanks to the return of U.S. traders who brought risk-off vibes along with them.

Major Events:

U.K. property sector takes a hit – Following the release of the BOE Financial Stability Report and Governor Mark Carney’s presser, three of the biggest property funds in the U.K. (Aviva, Standard Life, and M&G Investments) announced that they would be suspending redemptions. This basically means that these firms are refusing to let investors withdraw money, freezing nearly £10 billion worth of funds as property speculators have been on a rush to liquidate their holdings in the Brexit aftermath.

Analysts fear that more property funds and asset management firms could follow and impose restrictions on withdrawals as well, keeping a considerable amount of capital on hold and putting much greater stress on the financial sector. Yikes!

Downbeat U.S. data – Not even weaker than expected reports from the U.S. were enough to stop the dollar rallies, as these seem to have further boosted risk aversion in the financial markets. U.S. factory orders fell 1.0% in May versus the projected 0.8% drop while the IBD/TIPP Economic Optimism index fell from 48.2 to 45.5 instead of rising to the estimated 49.3 reading.

U.S. equity indices closed in the red, with the Dow 30 index down 0.61% to 17,840.62, the S&P 500 index lower by 0.68% to 2,o88.55, and the Nasdaq down 0.82% to 4,822.90. Black crack also returned its recent gains, sending both WTI crude oil and Brent crude oil back below the $50/barrel levels, while gold continued to advance on safe-haven demand.

Major Currency Movers:

GBP – The pound fell to record lows once more, confirming that the post-Brexit fallout ain’t over just yet.

GBP/USD crashed below the 1.3000 handle to a low of 1.2935, GBP/JPY broke below 132.00 and reached a low of 131.30, EUR/GBP broke past the .8400 resistance to a high of .8528, GBP/AUD is testing support at the 1.7500 handle, and GBP/NZD is down to 1.8200.

USD & JPY – The Greenback and the yen took advantage of the run in risk aversion as traders dumped their higher-yielding assets.

USD/JPY consolidated at 101.50 then broke down to 101.25, EUR/JPY tumbled from the 112.50 area to a low of 111.95, AUD/JPY pulled up close to the 76.00 handle but eventually slipped to 75.30, EUR/USD carried on with its decline below 1.1100 to a low of 1.1057, and AUD/USD is down to the .7450 minor psychological mark.

Watch Out For:

  • 12:00 am GMT: U.K. BRC Shop Price Index

See also:

Asian Session Recap

London Session Recap

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