U.S. Session Forex Recap – Sept. 7, 2016

  • U.S. ISM non-manufacturing PMI down from 55.5 to 51.4 vs. 55.4 forecast
  • U.S. IBD/TIPP economic optimism index down from 48.4 to 46.7
  • U.S. labor market conditions index down from +1.3 to -0.7 in August
  • New Zealand GDT price index up 7.7% in latest auction
  • New Zealand manufacturing sales recovered 2.2% in Q2
  • Australia’s AIG construction index down from 51.6 to 46.6

The Greenback had a miserable day after Uncle Sam printed downbeat reports that further dampened hopes of another Fed rate hike for the year.

Major Events:

Disappointing U.S. data – Another day, another batch of weak reports! The dollar’s post-NFP slump resumed when the ISM non-manufacturing PMI saw a drop from 55.5 to 51.4, lower than the estimated dip to 55.4. This indicates a much slower pace of industry growth, dragged mostly by components such as new orders, business activity, and inventories.

Meanwhile, the labor market conditions index constructed by no less than Fed head honcho Yellen herself dropped back into negative territory at -0.7 from the earlier +1.3 reading. The U.S. IBD/TIPP economic optimism index wasn’t such a ray of sunshine either, as the reading fell from 48.4 to 46.7 this month instead of improving to the projected 48.6 figure.

Green shoots in New Zealand – Just before U.S. session traders called it a night, they got a glimpse of upbeat readings from New Zealand. The bi-weekly Global Dairy Trade auction yielded an impressive 7.7% gain in dairy prices, slower than the previous 12.7% increase. Still, this marks the third consecutive rise in the GDT index, indicating sustained momentum in the country’s dairy industry.

To top it off, the quarterly manufacturing sales report printed a 2.2% rebound for Q2. This makes up for the previous quarter’s 2.0% slump, which was already upgraded from the initially reported 2.6% decline.

Iran willing to cooperate in oil output freeze? – Around half a year after its return to the oil market, Iran is looking less inclined to wrestle for its market share and more willing to play fair with the rest of the oil-producing nations in keeping prices supported. According to Mohsen Gamsari, a member of the board of directors of the National Iranian Oil Company, the country is “closer to the idea” of freezing production ahead of the informal OPEC meeting later this month.

Even Iranian President Rouhani seems to be on board as he noted that “Iran will support any measure toward market stabilization and oil price recovery that is based on a fair and just share for member countries.” However, Rouhani also noted that it’s vital to restore pre-sanction levels of oil output in order to make up for their lost production back then. Talk about giving mixed signals!

Major Market Movers:

USD – Weaker than expected ISM non-manufacturing PMI was a downer for the dollar since this reminded traders that the Fed can’t afford to tighten policy just yet.

EUR/USD jumped from 1.1160 to a high of 1.1264 (+0.86%), GBP/USD climbed from 1.3354 to a high of 1.3446 (+0.69$), USD/JPY dropped from 103.38 to a low of 101.94 (-1.39%), and USD/CHF is down from .9790 to .9694 (-0.98%).

NZD – In contrast, the Kiwi was one of the best performers for the day, getting a boost from the upbeat dairy auction outcome.

NZD/USD rallied from .7339 to a high of .7422 (+1.40%), EUR/NZD dropped from 1.5211 to 1.5161 (-0.33%), AUD/NZD is down from 1.0394 to a low of 1.0346 (-0.46%), and NZD/CAD is up from .9474 to a high of .9536 (+0.65%).

Watch Out For:

  • 1:30 am GMT: Australian GDP q/q (0.6% expected, 1.1% previous)
  • 5:00 am GMT: Japanese leading indicators (98.6% expected, 99.2% previous)

See also:

London Session Recap

Asian Session Recap

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