U.S. Session Forex Recap – Sept. 27, 2016

  • U.S. new home sales down from 659K to 609K in Aug
  • ECB Gov Draghi: Post-Brexit euro zone economy resilient so far
  • Draghi: Brexit impact depend on length of uncertainty
  • Fed official Kaplan: Would’ve been comfortable with a September hike
  • Fed official Kashkari: No hike in Sept was the right move

Even though U.S. data came in slightly stronger than expected, it looks like forex junkies are steering clear of U.S. equities and the dollar.

Major Events:

Better than expected U.S. data – The only data point out of the U.S. was the new home sales report, which showed a stronger than expected 609K figure versus the 598K consensus for August. This appears to be an outlier from the earlier batch of housing reports, such as building permits and existing home sales, which churned out downbeat results. To top it off, the July reading was upgraded 654K to 659K.

Remarks from Fed officials – A number of Fed officials have been sharing their take on the FOMC’s decision to keep interest rates unchanged during their policy statement this month.

Non-voting member Kaplan mentioned that he actually would’ve been comfortable with a September hike since he is starting to get concerned about the distortions that low interest rates are causing. Minneapolis Fed President Kashkari, who is also a non-voting member, believed that the decision to hold was the right one, citing low inflation and an increase in the labor force.

BOC Governor Poloz’s testimony – Canadian central bank head Stephen Poloz acknowledged the weak points in the economy during his latest testimony, noting that it may take years before Canada can recover from the slump in crude oil prices.

The rest of his speech focused on the challenges of increased trade integration, which he thinks would make it more difficult for central bank to achieve inflation targets. He added that this move would also dampen the effect of interest rate changes on the domestic economy.

Major Market Movers:

CAD – The Canadian dollar weakened across the board as crude oil tumbled on the lack of an OPEC deal and on downbeat remarks from BOC Governor Poloz.

USD/CAD popped up from 1.3170 to a high of 1.3244 (+0.56%), CAD/JPY is down from 76.25 to 75.67 (-0.76%), EUR/CAD is up from 1.4831 to a high of 1.4906 (+0.51%), and GBP/CAD climbed from 1.7012 to a high of 1.7179 (+0.98%).

Watch Out For:

See also:

London Session Recap

Asian Session Recap

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