U.S. Session Forex Recap – August 31, 2016

  • Canadian current account deficit widened to 19.9M CAD
  • Canada’s raw materials price index down 2.7% vs. projected 1.3% drop
  • Canada’s industrial product price index up 0.2% vs. estimated 0.1% dip
  • U.S. CB consumer confidence up from 96.7 to 101.1 in August vs. 97.2 forecast
  • U.K. GfK consumer confidence index improved from -12 to -7

The Greenback seems to be shaping up for a strong finish this month as volatility is starting to pick up in the forex market again.

Major Events:

U.S. consumer confidence data  The August CB consumer confidence index landed at 101.1 – its highest reading since September last year – versus the estimated 97.2 figure, up from the previous month’s reading which was downgraded from 97.3 to 96.7. This rise in optimism suggests that consumers could keep spending their moolah in the coming months instead of keeping their hands in their pockets.

This also suggests that the personal spending and income figures, which came in line with expectations for the month of July, could continue to see positive momentum moving forward. Bear in mind that Fed Chairperson Yellen showed her hawkish cards in the Jackson Hole Symposium last week so traders are hopeful that upbeat data would keep the U.S. central bank on track towards hiking interest rates soon.

Mixed data from Canada  Over in the Great White North, the current account deficit widened to 19.9 million CAD from the previous 16.6 billion CAD shortfall, which was already upgraded from the initially reported 16.8 billion CAD deficit. Components of the report revealed that this was spurred by weaker export activity but that foreign investment in the country remained afloat.

Underlying inflation readings were also a mixed bag. The raw materials price index posted a sharp 2.7% decline, more than double the estimated 1.3% slump, while the industrial product price index rose by 0.2% instead of showing the projected 0.1% dip. On a less downbeat note, the previous period’s readings enjoyed small upgrades.

Weaker oil prices  With the OPEC September meeting looming, market watchers are paying closer attention to crude oil price action. WTI crude oil was down 76 cents to $46.26 per barrel for the day, even as Iraq’s Prime Minister Haider Al-Abadi noted that they would support an oil output freeze if the OPEC agrees on it.

Major Currency Movers:

USD – The U.S. currency asserted its dominance in the forex arena, buoyed by Fed rate hike expectations and upbeat economic data.

EUR/USD slid from 1.1164 to 1.1142 (-0.36%), USD/JPY rallied from 102.34 to 103.04 (+0.68%), GBP/USD managed to hold steady around 1.3102 to 1.3079 (-0.18%), USD/CHF rose from .9805 to .9838 (+0.34%), and AUD/USD dropped from .7551 to .7508 (-0.57%).

JPY – The yen was the weakest performer for the day as traders priced higher odds of additional BOJ easing.

EUR/JPY climbed from 114.25 to 114.79 (+0.47%), GBP/JPY rose from 134.08 to 134.75 (+0.50%), AUD/JPY is up from 77.26 to 77.34 (+0.10%), and NZD/JPY surged from 74.06 to 74.34 (+0.39%).

Watch Out For:

  • 11:50 pm GMT: Japanese industrial production (0.7% expected, 2.3% previous)
  • 1:00 am GMT: RBA Assistant Gov Debelle’s testimony
  • 1:00 am GMT: New Zealand ANZ business confidence
  • 1:30 am GMT: Australia private sector credit (0.4% expected, 0.2% previous)
  • 5:00 am GMT: Japanese housing starts y/y (+7.6% expected, -2.5% previous)

See also:

Asian Session Recap

London Session Recap

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