Article Highlights

  • Lack of dovish ECB statements drive bund yields higher
  • US ADP report: 201K vs. 198K expected, 165K previous
  • CA trade balance shows 2.97B CAD deficit vs. 2.1B CAD deficit expected, 3.9B CAD deficit previous
  • US trade balance clocks in 40.9B USD deficit vs. 43.9B CAD deficit expected, 50.6B CAD previous
  • US ISM non-manufacturing PMI: 55.7 vs. 57.1 expected, 57.8 previous
  • US ISM manufacturing PMI: 52.8 vs. 52.0 expected, 51.5 previous
  • AU retail sales, trade balance on tap
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Forex trading was a mixed bag of nuts yesterday, as traders priced in U.S. data and a lack of dovish statements from the ECB.

The euro was front and center while Draghi was conducting a press conference during the U.S. session. Aside from not making any changes to its existing policies, the ECB also kept its growth and inflation forecasts mostly unchanged and repeated that Draghi and his team would carry on with their QE plans for as long as it’s needed. Interestingly, Draghi didn’t talk much about Greece, only saying that they’re working on keeping the country in the monetary block but that a “strong commitment has to be made.”

The lack of dovish statements encouraged risk-taking and drove out investors from the safe haven-like German bonds. German bond yields jumped to 0.888%, its biggest one-day gain on record and a new 2015 high for the asset.

This is probably why the euro was also pushed higher across the board. EUR/USD rocketed by a whopping 158 pips (+1.42%) to 1.1274 while EUR/JPY also saw a 184-pip run (+1.33%) to 140.08. Heck, even EUR/GBP jumped by 82 pips (+1.13%) to .7354 and EUR/CHF rose by 108 pips (+1.04%) to 1.0535!

Meanwhile, the dollar showed overall weakness. Uncle Sam’s slightly better-than-expected trade data was offset by misses in the ADP report and the ISM non-manufacturing PMI. This concerned dollar bulls who were looking for clues from employment-related reports ahead of this tomorrow’s NFP report.

USD/JPY lost 31 pips at the start of the session before it found support and ended the day at around 124.24. USD/CHF also showed dollar weakness with its drop to .9311 before leveling off at .9344. GBP/USD, which fell earlier on weak UK services PMI report, inched 47 pips higher (+0.31%) to 1.5332.

Comdoll price action wasn’t as consistent. Aussie bulls and bears played tug-o-pips at the .7770 area as they priced in Australia’s GDP report and weak U.S. data. NZD/USD jumped by 43 pips (+0.60%) to .7184 before weak dairy prices pushed it back down to .7149.

Last but definitely not the least is the Loonie, which suffered from weak Canadian trade data. Though higher oil prices gave the report some wiggle room, an overall weakness in demand wasn’t enough to push the deficit to market players’ expectations.

USD/CAD jumped to an intraday high of 1.2509 before weak U.S. reports dragged it back to 124.24. Meanwhile, CAD/JPY remained just below 100.00 and EUR/CAD jumped by 212 pips (+1.53%) to 1.4041.

Let’s see if comdoll traders show a bit more cohesion today. Australia is set to print its trade numbers, which is expected to show a 2.1B AUD deficit from the previous month’s 1.32B AUD deficit reading. Also at 1:30 am GMT the Land Down Under will release its retail sales report, which is expected to show a 0.3% growth like last month. These are both tier 1 reports, so any significant hit or miss could affect comdoll trading or even risk-taking. Make sure you keep an eye on them!

See also:

London Session Recap

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