Article Highlights

  • US bond markets out on Columbus Day holiday
  • Canadian markets out on Thanksgiving Day holiday
  • Fed’s Evans: rate hike pace more important than timing
  • Fed’s Lockhart: rate hikes still likely this year
  • BOJ monetary policy meeting minutes, AU NAB business confidence on tap
  • China’s trade surplus expected at $48.2B vs. $60.2B previous
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With U.S. bond markets and Canadian markets out on holidays, the dollar emerged as an overall winner during the U.S. forex trading session. What’s up with that?

There were no major reports printed throughout the session, but the lull in reports gave forex traders opportunities to take some profits off their short dollar trades.

Speeches by FOMC members might have helped. Atlanta Fed President Dennis Lockhart, one of the known doves, said that he still believes interest rates could rise in 2015. However, he also warned that the central bank should be confident in its policy direction before actually pulling the trigger.

The sentiment was echoed by Chicago Fed President Charles Evans, who reiterated that while he could be persuaded to support a 2015 rate hike, he also wants to see more data and be confident about Uncle Sam’s inflation before giving his thumbs up.

EUR/USD ended the session 16 pips lower (-0.14%) to 1.1362 while GBP/USD also slipped by 27 pips (-0.18%) to 1.5340. The dollar wasn’t as consistent against the lower-yielding currencies with USD/CHF popping up by 23 pips (+0.24%) to .9627 but USD/JPY sliding 11 pips lower (-0.09%) to 120.01.

The comdolls also bowed down to the Greenback despite mixed commodities price action. Gold futures rose by 1% to $1,155.90 per troy ounce as chances of a 2015 Fed rate hike continued to wind down while oil prices posted its biggest decline in six weeks after a report from the Organization of Petroleum Exporting Countries (OPEC) reflected that its members had produced the most oil barrels since 2012. Yipes!

AUD/USD rose up to a high of .7382 before capping the session with a 12-pip loss (-0.16%) to .7359. Ditto for NZD/USD, which also fell by 12 pips (-0.18%) to .6713 after hitting an intraday high of .6740. The Loonie gave up the most pips though, with USD/CAD jumping by 83 pips (+0.64%) to 1.3009 and CAD/JPY sliding by 68 pips (-0.73%) to 92.25.

Will the comdolls have their chance at getting back some pips today? Asian session forex traders have a couple of tier 1 reports on the docket today. The first salvo will come from Japan as the BOJ prints its monetary policy meeting minutes at 11:50 pm GMT. The central bank didn’t make any changes to its policies though we can get hints on the BOJ’s biases from the minutes.

Next up is Australia’s NAB business confidence report at 12:30 am GMT. The report could probably have more impact on the Aussie pairs if not for China also printing its trade balance data some time in the next couple of hours.
Market players are expecting China’s trade surplus to narrow down from $60B to around $48B.

If China prints a deeper decline (especially in imports), then we might see more losses from commodity-related currencies. After all, economies like Australia and New Zealand rely heavily on their exports to China and could take hits if one of their largest trading partners suddenly demand less of their products.

Good luck and good trading today, folks!

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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