U.S. Session Forex Recap – Jan. 7, 2015

  • US factory orders down by 0.7% in November vs. 0.5% downtick expected, 0.7% slip in October
  • US ISM non-manufacturing PMI drops to 56.2 vs. 58.0 figure expected, 59.3 previous
  • CA raw materials price index falls by 5.8% vs. -4.7% expected, -4.2% previous
  • CA industrial price index down by 0.4% vs. -0.7% expected, -0.6% previous
  • Strong dairy auction pushes NZD higher across the board

Flight to safety reigned supreme during the U.S. forex trading session, as traders continued to price in risk aversion. Which currencies strengthened and which ones weakened?

High-yielding currencies like the euro and pound actually held up well against the dollar in the first hours of the U.S. trading session after getting hit in in the earlier trading sessions. If you recall, the euro is reacting to speculations of QE from the ECB and a possible Grexit, while other high-yielding currencies were reacting to the weaknesses in equities and oil prices.

It also helped the dollar bears that U.S. ISM services PMI numbers clocked in its slowest pace in six months with the employment component showing its slowest growth since July. The potential slowdown in jobs creation did not bode well for this Friday’s monster NFP report.

It wasn’t until the European session traders signed off when we saw a return to low-yielding bets. EUR/USD fell from a session high of 1.1958 and closed at 1.1899, GBP/USD closed 44 pips lower than its session high at 1.5153, and USD/JPY recovered from a low of 118.06 to close at 118.51.

Yen crosses were also volatile with EUR/JPY dropping by another 74 pips to 141.01, GBP/JPY falling by 130 pips to 179.57, and AUD/JPY taking an 86-pip hit to 95.95. Yowza!

Another trading session winner was the Kiwi, which reacted to a rise in international dairy prices. A decline in supply and a downgrade in milk production forecasts helped boost dairy prices by 3.6% yesterday.

NZD/USD jumped from .7747 to .7810 before settling to .7772 while NZD/JPY avoided losses at 92.10 and EUR/NZD fell by 69 pips to 1.5311.

If you’re planning on trading the Kiwi today, then you could trade New Zealand’s ANZ commodity price index out at 1:00 am GMT. Analysts are expecting a 4.4% decline from a 1.6% slip in November. If you’re into the Aussie, then you could price in Australia’s AIG services PMI report, which had just printed at 47.5 vs. last month’s 43.8 reading.

Good luck!

See also:

London Session Recap

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