Article Highlights

  • CA monthly GDP: -0.2% vs. -0.1% expected and 0.3% previous
  • US advance quarterly GDP reading: 2.6% vs. 3.0% expected, 5.0% previous
  • US quarterly core PCE price index: 1.1% as expected vs. 1.4% previous
  • US Chicago PMI: 59.4 vs. 57.5 expected, 58.8 previous
  • US quarterly employment cost index: 0.6% as expected vs. 0.7% previous
  • US revised UoM consumer sentiment: 98.1 vs. 98.2 previous
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Price action was a mixed bag of nuts during the U.S. session, as forex traders priced in a weak U.S. GDP report and a bit of risk aversion.

Uncle Sam’s weaker-than-expected GDP report was under the spotlight during the U.S. session. The advance quarterly reading came in at 2.6%, way lower than the 3.0% figure that markets had expected. Fortunately for dollar bulls, the previous reading was also revised higher from 3.5% to 5.0% and other U.S. reports generally surpassed analyst estimates.

EUR/USD slipped by another 7 pips to 1.1300 after hitting a low at 1.1280, while GBP/USD inched 13 pips higher to 1.5062 after dropping to an intraday low of 1.4990.

The Loonie also grabbed headlines after Canada printed a weaker-than-expected GDP report in November. Word on the hood is that the declines in manufacturing (the most since January 2009!) as well as mining and quarrying and oil and gas extraction contributed to the disappointing GDP data. Not surprisingly, these numbers also inspired speculations of more rate cuts from the BOC. Yikes!

USD/CAD jumped to a new high of 1.2799 before a recovery in oil prices dragged it back down to 1.2709 while CAD/JPY fell to a new weekly low of 91.75 before settling back at 92.38. Even EUR/CAD saw a spike to 1.4490 before it closed at 1.4359.

Forex traders have another busy week ahead with the monster NFP report scheduled on Friday. Before we get to that though, we’ll also see other major economic events, including todays’ Chinese manufacturing PMI release.

The report just hit a contractionary figure at 49.8 from 50.1, while the non-manufacturing PMI also slipped from 54.1 to 53.7. Meanwhile, Australia’s AIG manufacturing index and MI inflation gauge reports both printed higher than market estimates.

Watch out for other news reports that might affect risk sentiment. At 2:35 am GMT we’ll see Japans’ final manufacturing PMI, followed by China’s HSBC final manufacturing numbers at 2:45 am GMT. Significantly weaker-than-expected numbers could inspire more talks of central bank easing and push the low-yielding yen and dollar higher across the board, while strong numbers could erase some of the comdolls’ losses from last week.

Good luck!

See also:

London Session Recap

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