U.S. Session Forex Recap – Sept. 9, 2016

  • ECB Gov Draghi: We continue to expect moderate, steady growth
  • Draghi reiterated no stimulus necessary for the time being
  • ECB will continue to monitor markets, has “full mandate” to redesign QE
  • ECB upgraded 2016 GDP forecast from 1.6% to 1.7%, inflation estimate unchanged at 0.2%
  • U.S. initial jobless claims at 259K vs. 264K forecast
  • U.S. crude oil inventories down 14.5 million barrels
  • Canadian building permits up 0.8% vs. 3.2% forecast

All eyes and ears were still on the ECB during Governor Draghi’s presser, as the central bank head explained why they kept policy unchanged for the time being.

Major Events:

Governor Draghi’s press conference – Draghi just never runs out of surprises, doesn’t he? Instead of doling out additional easing measures as many had expected, Draghi said that he doesn’t see the need for more stimulus for the time being, adding that they continue to expect moderate, steady growth.

Their updated growth and inflation forecasts confirm this, as policymakers even upgraded the GDP forecast for this year from 1.6% to 1.7% while maintaining their growth estimates for the next couple of years. Policymakers kept their inflation estimate on hold at 0.2% for this year.

In response to one of the questions from the press, Draghi reiterated there should be no doubts about their will or capacity to act and that they have the “full mandate” to redesign QE. But for now, the ECB will continue to monitor the markets.

Downbeat Canadian data – Economic reports from Canada printed weaker than expected results, which probably explains why the Loonie was barely able to benefit from the large drop in U.S. crude oil inventories.

Canadian building permits posted a meager 0.8% uptick in July, much weaker than the estimated 3.2% gain. Capacity utilization was also weaker than expected at 80% versus the projected 81.5% figure and the earlier 81.4% reading. On a less downbeat note, the NHPI posted a higher than expected 0.4% increase in house prices, underscoring the BOC’s view that property market risks could be elevated.

Major Market Movers:

EUR – The shared currency returned some of its post-ECB gains when Draghi kept the door open for additional easing but quickly recovered against most of its peers.

EUR/USD retreated from a high of 1.1328 to a low of 1.1240, EUR/JPY fell to a low of 114.53 but soon recovered to 115.40, EUR/GBP is down from .8480 to .8454, and EUR/NZD found support at 1.5175 before climbing to 1.5243.

CAD – Not even the larger than expected draw in oil stockpiles was able to lift the Loonie’s spirits, which were dampened by downbeat data, but the Canadian currency still outpaced its other comdoll buddies.

USD/CAD is up from 1.2880 to 1.2939, EUR/CAD tossed and turned from a high of 1.4611 to a low of 1.4524, and GBP/CAD managed to cruise sideways at 1.7200. AUD/CAD is down to a low of .9868 and NZD/CAD fell to a low of .9537.

Watch Out For:

  • 1:30 am GMT: Australian home loans (-1.3% expected, +1.2% previous)
  • 1:30 am GMT: Chinese CPI y/y (1.7% expected, 1.8% previous)
  • 1:30 am GMT: Chinese PPI y/y (-1.0% expected, -1.7% previous)
  • 4:30 am GMT: Japanese tertiary industry activity index (0.4% expected, 0.8% previous)

See also:

London Session Recap

Asian Session Recap

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