Article Highlights

  • US core PCE price index clocks in at 0.1% as expected and similar to last month
  • US personal spending down by 0.2% vs. 0.1% growth expected, 0.5% growth previous
  • US Chicago PMI at 66.2 vs. 60.0 expected, 60.5 previous
  • US revised UoM consumer sentiment at 86.9 vs. 86.4 expected and previous
  • CA GDP down by 0.1% in August vs. 0.0% growth expected and previous
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And the yen selloff continues! Though we had a couple of mid-tier reports released, traders still traded on risk sentiment during the U.S. forex trading session.

Currency bulls dominated the last trading session of the month, as they continued to price in the BOJ’s new set of stimulus.

USD/JPY rose by another 75 pips to 112.34, GBP/JPY jumped by another 105 pips to 179.66, and EUR/JPY saw a 27-pip gain throughout the session.

The low-yielding Greenback also limited its gains against its higher-yielding counterparts. With gold slipping, oil rising, and U.S. equities closing at their record highs, risk-taking extended to the major currencies after the first hours of the session.

Weak German data still dragged EUR/USD 60 pips lower to 1.2524, but GBP/USD managed to recover from its 1.5943 lows to close at 1.5994. AUD/USD also closed at .8795, 20 pips higher than its session lows.

Another notable mover was the Loonie, which reacted to Canada’s worse-than-expected GDP report. A drop in oil and gas output, combined with weakness in manufacturing, dragged Canada’s economy by 0.1% in August. This marks as the first fall since December, and raises the chances that the Bank of Canada might turn dovish in its next meeting.

USD/CAD jumped by 144 pips to 1.1332 in the first two hours of the session before settling back down to 1.1257. CAD/JPY also weakened by 57 pips to 99.18 before yen bears stepped in and pushed it back up to 99.72. Even EUR/CAD saw Loonie weakness with its 91-pip jump to 1.4169 before it closed at 1.1411.

Will we see more risk-taking today? Japan is on a Culture Day bank holiday today, so we’ll unlikely to see any JPY-bullish news today. Australia had just released its AIG manufacturing index, MI inflation gauge, building approvals, and ANZ jobs ads reports, and judging by AUD’s early Asian session price action, traders aren’t taking the results well.

China is also out with its non-manufacturing PMI and HSBC final manufacturing readings. We’ll dissect these reports on the Asian session update, but for now keep your eyes peeled for any directional movement that might result from today’s reports.

Good luck!

See also:

London Session Recap

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