Article Highlights

  • US PPI: 0.0% vs. -0.1% expected, 0.2% previous
  • US core PPI: 0.3% vs. 0.1% expected, 0.3% previous
  • US preliminary UoM consumer sentiment: 85.7 vs. 91.1 expected and previous
  • US budget balance: -64.4B USD vs. -77.5B USD expected, -149.2B USD previous
  • Chinese data dump prints mixed results
  • Japan industrial production on tap
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The dollar took another beating across the board after a weak U.S. data encouraged forex traders to take profits ahead of this week’s FOMC report.

The dollar started the session on a somewhat solid footing when both the headline and core PPI reports came in better-than-expected. Unfortunately for dollar bulls though, market players were just plain jumpy over holding dollars ahead of this week’s FOMC interest rate decision.

Their excuse to sell dollars arrived near the end of London trading when the preliminary University of Michigan (UoM) consumer sentiment report missed its estimates. Last but not the least, traders had appetite for higher-yielding bets like commodities, equities, and higher-yielding currencies.

EUR/USD, one of the most closely-watched dollar pairs, popped up by 78 pips (+0.69%) to 1.1342 while USD/CHF dropped by 92 pips (-0.94%) to .9688. Even Cable inched 9 pips higher (+0.06%) to 1.5426 while USD/JPY steadied just above the 120.50 handle.

Even the comdolls had a good day against the dollar. The Aussie was still feeling the love from Australia’s better-than-expected employment reports and was further supported by small intraday gains in copper prices. For forex newbies out there, you should know that Australia heavily exports commodities, so their prices can have impact on Australia’s GDP.

AUD/USD rose by 22 pips (+0.31%) to .7084 while AUD/JPY also gained 17 pips (+0.20%) to 85.41. NZD/USD also moved 29 pips higher (+0.46%) to .6317 and USD/CAD slipped by 8 pips (-0.06%) to 1.3253 after climbing to an intraday high of 1.3310.

Will we see more dollar weakness today? China has released a data dump over the weekend and so far the mixed results haven’t affected the comdolls significantly. At around 4:30 am GMT though we’ll see Japan’s industrial production data, capacity utilization, and tertiary industry activity numbers. The reports don’t usually cause sustained impact on the Asian currencies, but keep your eyes peeled in case we see surprises that might affect risk appetite!

See also:

London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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