U.S. Session Forex Recap – Oct. 21, 2016

  • Philly Fed index down from 12.8 to 9.7 vs. 5.2 forecast
  • Initial jobless claims at 260K vs. 251K forecast
  • U.S. existing home sales up from 5.30M to 5.47M vs. 5.36M consensus
  • U.S. CB leading index up 0.2% as expected in Sept
  • New Zealand visitor arrivals rebounded 3.6%, -1.8% previous

Volatility picked up for euro and franc pairs as soon as Governor Draghi grabbed the mic while the Greenback managed to squeeze out some gains.

Major Events:

ECB press conference – The European Central Bank didn’t budge from its current monetary policy stance but things got a little more exciting during the presser. ECB head honcho Draghi was a little more dodgy than usual, refraining from providing definitive answers on what policymakers have up their sleeve.

When asked about their QE program, Draghi downplayed the idea of extending the stimulus program by saying that easy money won’t last forever. However, he also reiterated that tapering wasn’t discussed yet, adding that earlier rumors about QE tapering came from “someone who didn’t have any information.”

Governor Draghi confirmed that QE will run until March next year or beyond since there have been no signs of a convincing upward trend in inflation just yet. He added that risks to their outlook are still to the downside but that policymakers will look at the next batch of staff projections due in December.

Mixed U.S. reports – Economic data from Uncle Sam came in mixed, with a couple of reports printing better than expected results and the initial jobless claims posting a higher than expected read of 260K versus the projected 251K figure. The CB leading index came in line with expectations of a 0.2% rebound for September.

The Philly Fed index saw a decline from 12.8 to 9.7, reflecting a slowdown in industry growth, but this was better than the estimated drop to 5.2. Meanwhile, existing home sales came in at 5.47M, higher than the 5.36M consensus for September, but the previous reading was downgraded from 5.33M to 5.30M.

Major Market Movers:

EUR – The euro rallied then reversed as ECB head Draghi refrained from committing to any monetary policy adjustments during the press conference.

EUR/USD spiked up to a high of 1.1040 before retreating to a low of 1.0915, EUR/JPY jumped to a high of 114.53 then slid to a low of 113.37, EUR/GBP popped up to .9026 then fell back to .8925, and EUR/AUD pulled up to 1.4428 then edged down to the 1.4300 handle.

CHF – The Swiss franc had its share of volatile moves as it seemed to follow the euro around.

USD/CHF dipped to a low of .9843 then climbed back above .9900, EUR/CHF spiked to a high of 1.0871 then fell to a low of 1.0837, GBP/CHF hit a low of 1.2122 then moved up to 1.2180.

Watch Out For:

  • 2:00 am GMT: New Zealand credit card spending
  • Tentative: BOJ Governor Kuroda’s testimony

See also:

London Session Recap

Asian Session Recap

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