Article Highlights

  • US core PCE price index: 0.1% as expected and previous
  • US personal income: 0.3% vs. 0.4% expected, 0.5% previous
  • US personal spending: 0.4% vs. 0.3% expected, 0.4% previous
  • US pending home sales: -1.4% vs. 0.4% expected, 0.5% previous
  • Fed’s Evans concerned over inflation, urges patience on rate hike schedule
  • Fed’s Williams sees a rate hike this year
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Another mixed forex session for the dollar, which gained pips on the comdolls but lost against the euro, yen, and franc. What’s up with that?!

Uncle Sam’s mixed data probably didn’t help the Greenback against its low-yielding counterparts. Personal income slightly missed expectations while personal spending clocked in just above market estimates. Pending home sales also didn’t help when it showed a 1.4% decline after rising by 0.5% in July. It also didn’t help that lingering concerns over global growth and the Fed’s rate hike schedule weighed on U.S. equities and bond yields and limited the demand for the Greenback.

Even the Fed members’ speeches failed to give the dollar any traction. Fed member John Williams hinted at voting for a rate hike this year, saying that gradually raising rates is the next appropriate step for the Fed. Unfortunately for rate hike junkies, Fed member Charles Evans threw water to the fire when he expressed lingering concerns over inflation and called for “extra patient approach” to tightening policies. Yikes!

EUR/USD, one of the most closely-watched dollar pairs, popped up by 59 pips (+0.53%) to 1.1233 while USD/JPY slipped by 9 pips (-0.08%) to 119.98 and USD/CHF fell by 51 pips (-0.52%) to .9747. Even GBP/USD dipped by 16 pips (-0.11%) to 1.5170 by the end of the session.

The dollar didn’t have much trouble making pips against the comdolls, thanks in part to overall risk aversion and significant weaknesses in commodity prices. The sharp selloff in equities took gold prices down with it and dragged gold futures to its largest daily loss in three weeks. Even oil prices took a step back on risk aversion and oversupply concerns.

As a result, AUD/USD finished the session 30 pips lower from its session high while USD/CAD popped up by 21 pips (+0.16%) to 1.3393 and NZD/USD fell by 15 pips (-0.24%) to .6329.

Let’s see if risk aversion still drives forex price action today. Asian session traders don’t have anything major on their plates, so it’s likely that we’ll see more of yesterday’s moves. Don’t be too complacent though, and keep your eyes peeled for any news that might affect risk sentiment.

Good luck and good trading!

See also:

London Session Recap

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