Article Highlights

  • ECB keeps rates steady, is open to more easing
  • ECB plans to conduct less meetings and release minutes starting 2015
  • CA trade deficit now at 0.15 billion CAD. April’s deficit revised higher from 0.6 billion CAD to 0.96 billion CAD
  • US trade deficit narrows from $47B to $44.4B on exports surge
  • US initial jobless claims: 315K vs. 313K expected and previous
  • US NFP report: 288K vs. 215K expected and 224K previous
  • US unemployment rate now at 6.1% vs. 6.3% last month
  • US ISM non-mfg PMI: 56.0 vs. 56.3 expected and previous
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We expected an explosive trading session yesterday and investors sure didn’t disappoint! Let’s break down the headlines.

Uncle Sam’s NFP report started the fireworks as it came in at 288K, a lot stronger than last month’s 224K figure and the expected 215K reading. With the labor participation rate steady at 62.8%, this also brought down the unemployment rate at 6.1%.

The dollar bulls were also all over the trade balance report. Thanks to exports jumping to its record high, the U.S. trade deficit narrowed down from $47B to $44.4B. Overall the reports hinted that the economy isn’t as bad as the latest final GDP reading had suggested and this pushed the U.S. equities and the dollar higher across the board.

USD/JPY had jumped from 101.90 all the way to 102.28 while USD/CHF also registered a 38-pip spike to .8936.

The pound also took a hit at the NFP report but soon recovered even though the UK’s services PMI report had missed its estimates. If you recall, services make up a huge chunk of the UK economy. Still, GBP/USD only fell to a session low of 1.7105 before capping the day at 1.7152 while GBP/JPY had also recovered from 174.50 to close at 175.28. Yowza!

The ECB also made it on the newswires although Mario Draghi’s speech unsurprisingly didn’t have a significant impact on the euro. The central bank kept its current interest rates and policies unchanged with Draghi hinting that they’re still open to more easing should inflation outlook worsen.

He also clarified that the ECB isn’t likely to act until their last policy changes have made their impact. Last but not the least, Draghi also announced that the ECB would soon have fewer meetings (one every six weeks instead of monthly) and will start printing a meeting minutes starting January 2015.

EUR/USD easily succumbed to USD strength as it fell by 50 pips to 1.3605 at the NFP’s release. EUR/GBP also took a hit and ended the trading session 34 pips lower than its open price.

Even the comdolls were no match for the Greenback. AUD/USD and NZD/USD both weakened by around 40 pips at the NFP’s release but recovered a bit more than half of their session losses near the London session close.

It was the Loonie that caught some investors’ attention. Thanks to a lower Canadian trade deficit, USD/CAD only popped up by 26 pips before it dropped back down and ended the trading session 11 pips LOWER than its open price. CAD/JPY, which was also influenced by a jump in USD/JPY, ended the session 38 pips higher than its open price.

Unlike yesterday, today hints at a chill day for the major currencies. For starters, we only have RBA Assistant Governor Edey’s speech scheduled during the Asian trading session. This doesn’t mean that you shouldn’t be vigilant though! Keep close tabs on any retracement opportunities in case we see continuation from yesterday’s moves!

See also:

London Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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