- US CPI: -0.7% vs. -0.6% expected, -0.3% previous
- US core CPI: 0.2% vs. 0.1% expected and previous
- US initial jobless claims: 313K vs. 290K expected, 282K previous
- US core durable goods orders: 0.3% vs. 0.5% expected, -0.9% previous
- US FHFA house prices: 0.8% vs. 0.5% expected, 0.7% previous
- CA CPI: -0.2% vs. -0.4% expected, -0.7% previous
- CA core CPI: 2.2% vs. 2.1% expected, 2.2% previous
- Japan data dump scheduled during the Asian session
The U.S. trading session was a busy one for forex traders, as they priced in strong U.S. data and a couple of bullish statements from Fed officials.
Investors paid attention to inflation numbers, which showed a 0.7% decline (vs. 0.6% decline expected) in January. However, the core reading, which removes oil price fluctuations, actually rose by 0.2% (vs. 0.1% increase expected). If you recall, the Fed once said that it would look past oil price declines, believing the move to be temporary.
The durable goods numbers also gave the dollar momentum, as orders for manufactured goods rose by 2.8% from December to January. Analysts had expected a 1.6% uptick for the report.
The reports came in just after Yellen spent two days trying to temper rate hike speculations and downplaying improvements in the U.S economy. Unfortunately for the Fed, both the positive inflation and durable goods data supported claims that the economy is improving towards a level that might prompt rate hikes.
The cherry on top of the dollar sundae was Fed officials Bullard and Williams hinting at a possible rate hike this summer. Bullard said the Fed would first need evidence of inflation through spring while Williams says a summer rate hike is possible if data for the next few months meets his expectations.
EUR/USD dropped by a whopping 121 pips (-1.07%) to 1.1198 while USD/JPY jumped by 60 pips (+0.51%) to 119.50, GBPUSD fell 90 pips (-0.58%) to 1.5404 and USD/CHF inched 38 pips higher (+0.40%) to .9537.
The Greenback also gained on the comdolls with AUD/USD slipping by 97 pips (-1.23%) to .7791, USD/CAD spiking 55 pips higher (+0.44%) to 1.2527, and NZD/USD falling by 69 pips (-0.91%) to .7525.
Will the dollar also dominate the Asian forex trading session? Japan is set to release a data dump that includes its CPI, unemployment, industrial production, and retail sales numbers. Significantly weaker-than-expected numbers could one day prompt the BOJ to pump out more stimulus, so y’all better keep close tabs on yen price action and risk sentiment over the next couple of hours!
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!