U.S. Session Forex Recap – Oct. 19, 2016

  • U.S. headline CPI up by 0.3% in Sept. as expected
  • U.S. core CPI posted 0.1% uptick vs. projected 0.2% gain
  • Canadian manufacturing sales up by 0.9% vs. 0.3% forecast
  • New Zealand GDT price index up by 1.4% in latest auction

Dollar bulls weren’t so impressed by the latest set of U.S. CPI figures so the Greenback struggled to hold on to its recent gains but failed against the pound.

Major Events:

Mixed U.S. inflation figures – So much for counting on the CPI readings to boost November rate hike expectations! While the headline figure came in line with expectations of a 0.3% gain, the core version of the report printed a meager 0.1% uptick versus the projected 0.2% increase.

Still, this marked the fastest pace of increase in price levels in five months, underscoring Fed officials’ views that inflation is moving close to the central bank’s target. Components of the CPI report revealed that the gains were spurred by higher costs of gasoline and shelter.

U.K. Parliament vote on Brexit –Word on Downing Street is that the British parliament could be allowed to vote before Prime Minister Theresa May officially invokes Article 50 to start negotiations with EU officials.

According to James Eadie, a lawyer for the British government, it is very likely that any agreement with the EU would be subject to parliament approval, reassuring market watchers that a “hard Brexit” could be avoided. “Any such changes are a matter for future negotiations, parliamentary scrutiny, and implementation by legislation,” Eadie explained.

New Zealand dairy auction – Before New York session traders called it a night, New Zealand held its bi-weekly Global Dairy Trade auction and announced a 1.4% rebound in dairy prices. This partly makes up for the 3.0% decline seen in the previous auction and was enough to reassure Kiwi bulls that the industry could resume its positive streak in price gains. ANZ Bank has raised its milk price forecast for Fonterra as a result, likely translating to higher payouts for dairy farmers and producers down the line.

Major Market Movers:

GBP – The pound continued its advance after news broke out that MPs might be able to vote before Article 50 is invoked.

GBP/USD climbed from 1.2258 to a high of 1.2325, GBP/JPY is up from 127.76 to a high of 128.17, EUR/GBP slid from .8971 to .8916, GBP/AUD popped up from 1.5975 to 1.6075, and GBP/CAD climbed from 1.6029 to 1.6173.

CAD – The oil-related Loonie was able to get back on its feet when API data showed a surprise draw in stockpiles, but it still lagged behind its comdoll buddies.

USD/CAD climbed from 1.3077 to a high of 1.3139 before retreating to 1.3085, CAD/JPY dipped from 79.54 to a low of 79.08 then edged back up to 79.27, EUR/CAD pulled up to 1.4419 then tumbled to 1.4384, but AUD/CAD climbed to 1.0062 while NZD/CAD rallied to .9467.

Watch Out For:

  • 2:00 am GMT: Chinese Q3 GDP (6.7% expected, 6.7% previous)
  • 2:00 am GMT: Chinese retail sales y/y (10.7% expected, 10.6% previous)
  • 2:00 am GMT: Chinese industrial production y/y (6.4% expected, 6.3% previous)
  • 2:00 am GMT: Chinese fixed asset investment ytd/y (8.2% expected, 8.1% previous)
  • 4:30 am GMT: Japanese all industries activity index (0.2% expected, 0.3% previous)

See also:

London Session Recap

Asian Session Recap

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