U.S. Session Forex Recap – Oct. 18, 2016

  • Empire State manufacturing index down from -2.0 to -6.8 vs. +1.1 forecast
  • U.S. industrial production up 0.1% vs. projected 0.3% increase in Sept
  • U.S. capacity utilization rate up from 75.3% to 75.4% vs. 75.6% forecast
  • Fed official Fischer: U.S. is very close to inflation and employment goals
  • Canadian foreign securities purchases at 12.74B CAD vs. 6.24B CAD
  • Iran to boost production to 5 million barrels per day?
  • New Zealand CPI at 0.2% in Q3 vs. 0.0% forecast, 0.4% previous

Weak U.S. data forced the Greenback to retreat while the Loonie continued to advance despite weaker oil prices. What’s up with that?

Major Events:

Weak medium-tier U.S. data – Economic reports from Uncle Sam weren’t so impressive, reflecting signs of a slowdown in the goods producing sector. Industrial production was up 0.1% in September, slower than the estimated 0.3% increase, while the August reading was downgraded to show a sharper 0.5% fall. Capacity utilization rose from 75.3% to 75.4%, short of the 75.6% forecast.

Also, the Empire State manufacturing index slipped from -2.0 to -6.8 to show a faster pace of industry contraction instead of improving to the 1.1 consensus for October. Components of the report revealed that labor market indices rose but remained negative but that outlook remains optimistic.

Crude oil news – Word through the pipeline is that Iran is planning on ramping up oil production to 5 million barrels per day, as the Iranian oil minister confirmed that new Iranian Petroleum Contracts will help them reach that target. This is significantly higher than their output target of 4 million barrels per day before Western sanctions were imposed and up from their current 3.63 million barrels per day average in September.

If Iran pushes through with these plans, it could undermine an output cap from the OPEC, leaving oversupply concerns in play and keeping crude oil price gains in check. WTI crude oil dipped to a low of $49.45/barrel while Brent crude oil fell to $51.10/barrel upon hearing the news.

Major Market Movers:

USD – The U.S. dollar gave back some of its recent gains as traders reacted to downbeat figures from the manufacturing industry.

EUR/USD climbed from 1.0993 to 1.1024, GBP/USD bounced from 1.2149 to 1.2256, USD/JPY retreated from 104.12 to 103.76, USD/CHF is down from .9887 to .9869, AUD/USD is up from .7613 to a high of .7629, and NZD/USD popped up from .7122 to .7182 upon seeing upbeat CPI readings.

CAD – The oil-related Loonie managed to hold on to its gains as Canada’s foreign securities purchases came in twice as much as expected.

USD/CAD slipped from 1.3134 to 1.3086, CAD/JPY is up from 79.12 to 79.30, EUR/CAD is down from 1.4464 to a low of 1.4426, and GBP/CAD is down from 1.6033 to 1.5938.

Watch Out For:

  • 12:30 am GMT: RBA monetary policy meeting minutes
  • 12:30 am GMT: Australia new motor vehicle sales (0.0% previous)

See also:

London Session Recap

Asian Session Recap

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