U.S. Session Forex Recap – Nov. 16, 2016

  • U.S. Oct headline retail sales up 0.8% vs. 0.6% forecast
  • U.S. Oct core retail sales up 0.8% vs. 0.5% forecast
  • Empire State manufacturing index climbed from -6.8 to +1.5
  • U.S. import prices up 0.5% vs. 0.4% forecast
  • Sky News report: Legislation to delay Brexit by two years?
  • New Zealand GDT yielded 4.5% gain in dairy prices

Stronger than expected data from Uncle Sam meant another day of dollar domination in the forex arena while the Loonie got a boost from higher crude oil.

Major Events:

Upbeat U.S. economic reports – Data from the U.S. all came in the green, keeping hopes alive for a Fed rate hike next month. Headline retail sales for October increased 0.8%, outpacing the projected 0.6% rise, while the core version of the report printed a 0.8% gain, higher than the estimated 0.5% uptick.

To top it off, the previous month’s readings were upgraded from 0.6% to 1.0% for the headline figure and from 0.5% to 0.7% for the core figure. Components of the October retail sales report indicated that purchases in 11 out of the 13 major categories posted gains, setting the mood for more shopping sprees once the holiday season and the Thanksgiving sales come along.

The Empire State manufacturing index also beat expectations with a climb from -6.8 to +1.5 to reflect a return to industry growth. This was much better than the estimated improvement to -1.5, which would’ve merely indicated a slowdown in contraction. Import prices posted a 0.5% gain, slightly higher than the 0.4% consensus but loads better than the previous 0.2% uptick, suggesting stronger inflationary pressures down the line.

Higher commodity prices – Crude oil took a break from its slide, boosted by fresh speculations of an OPEC output deal. Word through the pipeline is that OPEC Secretary General Barkindo is making the rounds and talking to energy ministers from Saudi Arabia, Iran, Venezuela, Russia and Ecuador in order to engineer an agreement before the official pow-wow later this month. WTI crude oil is up to $45.73/barrel while Brent crude oil recovered to $46.94/barrel upon hearing this news.

The Global Dairy Trade auction in New Zealand yielded positive results for the sector, as it reported a 4.5% gain in prices. This is weaker compared to the earlier 11.4% jump in the dairy index but still a gain nonetheless, chalking up its third consecutive increase.

Major Market Movers:

USD – After a bit of profit-taking earlier in the day, the Greenback flexed its muscles against its counterparts once more.

EUR/USD pulled up to the 1.0800 area then fell back down to 1.0740, USD/JPY continued its ascent to a high of 109.34, and USD/CHF is testing resistance at parity.

CAD – The Loonie refused to sit in the losers’ bench as it took advantage of the pickup in crude oil prices.

USD/CAD slipped below the 1.3500 level to a low of 1.3445, CAD/JPY climbed from 80.00 to a high of 81.21, and EUR/CAD is down from 1.4552 to 1.4430.

GBP – Sterling staged a bit of a rally during the latter half of the U.S. session, thanks to a news report suggesting that Brexit could be delayed by two years.

GBP/USD dropped from 1.2404 to a low of 1.2380 then rallied back to 1.2440, GBP/CAD dropped from the 1.6800 area to a low of 1.6683 then bounced to 1.6847, and GBP/JPY popped up from 135.00 to a high of 136.57.

Watch Out For:

  • 12:30 am GMT: Australia wage price index q/q (0.5% expected, 0.5% previous)
  • 12:30 am GMT: Australia new motor vehicle sales

See also:

London Session Recap

Asian Session Recap

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