U.S. Session Forex Recap – Nov. 11, 2016

  • Initial jobless claims at 254K vs. 267K forecast
  • Fed official Lacker: More fiscal stimulus to give room for rate hike
  • Lacker: Inflation close to 2% target
  • Fed official Bullard called for rate hike then extended hold

U.S. traders seem to be in good spirits, allowing most equity indices to close higher for another day and banking on the hope that a Trump presidency probably isn’t the worst idea.

Major Events:

Market warming up to Trump? – Wall Street chalked up back-to-back positive days, with the Dow up 1.17% and the S&P 500 index closing 0.20% higher. Market watchers seem to be zooming into Trump’s plans to increase infrastructure spending and fiscal stimulus, which might actually give the U.S. economy an extra boost.

Besides, traders were able to see another side of the Donald when he gave his victory speech, which eased Doomsday predictions for the U.S. economy. Moving forward, headlines on the government’s economic agenda could continue to impact market sentiment even though Trump won’t be sworn in until January next year.

Hawkish Fed official talk – A couple of Fed officials gave testimonies reiterating the chance of a December rate hike, which also contributed to the dollar’s rallies. For Fed official Lacker, the prospect of additional fiscal stimulus from the Trump administration should give the central bank more room to tighten monetary policy. He added that inflation is close to the 2% target but warned that productivity remains low.

Meanwhile, FOMC voting member Bullard repeated his call for a rate hike but added that this might need to be followed by an extended holding period, which suggests that the U.S. central bank could sit on its hands for yet another year after hiking.

Major Market Movers:

USD – The Greenback soared up the charts, lifted by positive equities performance and a bit of optimism for the Trump administration.

EUR/USD slipped from 1.0900 to a low of 1.0864, USD/JPY consolidated around 106.60 after surging past 106.00 in the previous session, USD/CHF also moved sideways below .9900, AUD/USD tumbled to .7600, and USD/CAD busted past the 1.3500 handle to a high of 1.3509.

GBP – Sterling was another top performer, as the British currency seemed to benefit from the run in risk-taking.

GBP/USD jumped from 1.2391 to a high of 1.2585, GBP/JPY surged from 131.57 to a high of 134.26, EUR/GBP dropped from .8781 to a low of .8662, and GBP/CHF rallied to 1.2400.

Watch Out For:

  • 4:30 am GMT: Japan’s tertiary industry activity index

See also:

London Session Recap

Asian Session Recap

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