U.S. Session Forex Recap – Nov. 24, 2016

  • U.S. durable goods orders up 4.8% in Oct vs. 1.2% forecast
  • U.S. core durable goods orders up 1.0% vs. projected 0.2% uptick
  • Initial jobless claims at 251K vs. 241K forecast, 233K previous
  • U.S. flash manufacturing PMI up from 53.4 to 53.9 in Nov
  • U.S. new home sales down from 574K to 563K vs. 591K forecast
  • UoM consumer sentiment index upgraded from 91.6 to 93.8 this month
  • FOMC minutes: Rate hike appropriate “relatively soon”
  • FOMC minutes: Near-term risks roughly balanced

Upbeat U.S. data and hawkish FOMC minutes gave the Greenback enough energy to soar higher against its peers, but sterling managed to maintain its lead.

Major Events:

Mostly upbeat U.S. data – Uncle Sam’s reports were feeling the holiday vibes, printing a mix of red and green (but mostly green) on the calendar. Headline durable goods orders racked up a 4.8% gain in October, four times as much as the projected 1.2% gain, while the core version of the report showed a 1.0% gain versus the estimated 0.2% uptick.

Aside from that, the UoM consumer sentiment index was upgraded from 91.6 to 93.8 this month to account for the pickup in optimism following the U.S. elections. The flash manufacturing PMI for November advanced from 53.4 to 53.9 to reflect stronger industry growth, higher than the estimated 53.6 figure.

As for the not-so-good news, initial jobless claims showed a larger 251K figure versus the 241K forecast and the previous 233K reading, suggesting slower momentum in hiring. Also, new home sales slid from 574K to 563K in October instead of climbing to the 591K consensus.

FOMC meeting minutes – As expected, the FOMC minutes confirmed that most policymakers thought that an interest rate hike would be appropriate “relatively soon” and that it might need to happen in December to preserve the central bank’s credibility.

“Some participants noted that recent committee communications were consistent with an increase in the target range for the federal funds rate in the near term or argued that to preserve credibility, such an increase should occur at the next meeting,” the transcript of the November FOMC huddle indicated.

FOMC members also noted that near-term risks remain “roughly balanced” and cautioned that letting the jobless rate fall too much before tightening could put the economy in danger of overheating. These remarks underscored Fed head Yellen’s views on adjusting monetary policy to make room for increased fiscal stimulus, which she shared in her testimony last week.

Crude oil chatter – With the official OPEC meeting fast-approaching, it’s no surprise that traders are paying extra close attention to what energy ministers and OPEC leaders have been saying.

The latest word is that Iraq’s Prime Minister has expressed support for an output cut, citing that they are willing to do their part in this coordinated plan of action. He recommended the oil cartel to cut 900K barrels per day of production, explaining that their losses in lowering output could be compensated by gains in revenues per barrel once prices pick up.

Now this leaves Iran, Nigeria, and Libya opposing huge production cuts for themselves, as these oil-producing nations argue that previous sanctions should exempt them from the output deal. Still, WTI crude oil recovered to $48/barrel while Brent crude oil bounced back to $48.93/barrel.

Major Market Movers:

USD –  The Greenback’s rallies picked up steam once more, fueled by the FOMC minutes and relatively strong U.S. reports.

USD/JPY continued its climb from 111.13 to a high of 112.97 (+1.65%), USD/CHF popped up from 1.0105 to a high of 1.0182 (+0.76%), EUR/USD resumed its drop from 1.0621 to 1.0525 (-0.90%), and AUD/USD fell from .7445 to .7370 (-1.00%).

GBP – Even with the dollar’s rebound, the pound was still the runaway winner for the day, thanks to the U.K. Autumn Forecast Statement.

GBP/USD is up from 1.2398 to 1.2468 (+0.56%), GBP/JPY rallied from 137.78 to a high of 140.35  (+1.86%), EUR/GBP slid from .8658 to .8475 (-2.11%), and GBP/AUD rose from 1.6660 to 1.6875 (+1.29%).

Watch Out For:

  • 12:30 am GMT: Japanese flash manufacturing PMI (51.7 expected, 51.4 previous)

See also:

London Session Recap

Asian Session Recap

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