U.S. Session Forex Recap – Oct. 5, 2016

  • New Zealand GDT auction yielded a 3.0% drop in dairy prices
  • Australia’s AIG services index up from 45.0 to 48.9
  • U.K. BRC shop price index down by 1.8% in Sept
  • ECB officials starting to discuss QE tapering?

Euro pairs jumped after hearing about the idea of QE tapering from unnamed central bank officials. What’s that all about?

Major Events:

ECB QE tapering talks – The lack of top-tier market releases during the New York trading session left traders scouring the headlines for news, and it just so happened that Bloomberg published a piece on the possibility of the ECB tapering its quantitative easing program before it even concludes.

According to unnamed sources from the central bank, an informal consensus has been reached within the ECB last month on the need to wind down their monthly asset purchases of 80 billion EUR before the program’s earliest end date in March next year.

However, when pressed for a response, ECB Governor Draghi denied that the governing council has had these discussions and noted that they will not comment further on the speculation. This left market participants busy coming up with their theories on how the ECB might go about this tapering process, with some predicting that the central bank could lower the amount of monthly purchases while extending the end date of the program.

Major Market Movers:

EUR – The shared currency cheered the idea of QE tapering but quickly retreated from its intraday highs before consolidating.

EUR/USD surged from a low of 1.1137 to a high of 1.1239 before retreating back to 1.1200 (+0.92%), EUR/JPY climbed from 114.47 to a high of 115.38 (+0.79%), EUR/GBP rallied from .8757 to the .8800 handle (+0.49%), and EUR/AUD is up from 1.4558 to 1.4725 (+1.56%).

NZD – The Kiwi had its wings clipped upon seeing the decline in dairy prices during the latest GDT auction.

NZD/USD crashed from .7283 to a low of .7207 (-1.04%), NZD/JPY slipped from 74.68 to 73.88 (-1.07%), EUR/NZD rallied from 1.5326 to 1.5541 (+1.40%), and AUD/NZD popped up from 1.7535 to 1.7712 (+1.01%).

Watch Out For:

  • Chinese banks closed for the holiday
  • 12:00 am GMT: New Zealand ANZ commodity prices
  • 12:30 am GMT: Australia retail sales (0.2% expected, 0.0% previous)

See also:

London Session Recap

Asian Session Recap

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