- CA CPI: -0.2% vs. -0.1% expected, 0.0% previous
- CA CPI (y/y): 1.0% vs. 1.1% expected, 1.3% previous
- CA core CPI: 0.2% vs. 0.3% expected, 0.2% previous
- CA core CPI (y/y): 2.1% vs. 2.2% expected, 2.1% previous
- US flash manufacturing PMI: 54.0 vs. 52.7 expected, 53.1 previous
- New Zealand on Labor Day holiday
Dollar domination was the name of the game during the U.S. forex trading session, as dovish moves from other major central banks brought back appetite for the Greenback.
Unless you’ve been too busy watching spoofs of Drake’s “Hotline Bling,” then you should know that the People’s Bank of China (PBoC) surprisingly cut its interest rates (among others) last Friday. As I mentioned in my London session recap, the idea easy money for the world’s second largest economy sat well with investors and encouraged appetite for high-yielding currencies like the comdolls.
But the dollar bulls also came to trade last Friday. Recall that global growth concerns were one of the Fed’s major hindrances to hiking its rates this year. Now that the ECB and PBoC are taking measures to protect their economies’ growth, then the Fed now has fewer reasons not to hit the rate hike button.
This is probably why the dollar was bought like there’s no tomorrow. EUR/USD fell by 83 pips (-0.75%) to 1.1012 while GBP/USD also suffered a 102-pip decline (-0.66%) throughout the session. Even the Aussie and Kiwi, both stronger after the PBoC’s rate cut, fell by 62 pips (-0.85%) and 45 pips (-0.66%), respectively.
The dollar also gained against its low-yielding counterparts with USD/JPY popping up by 74 pips (+0.61%) to 121.43 and USD/CHF inching 53 pips higher (+0.54%) to .9792. It might have also helped the Greenback that Uncle Sam’s flash manufacturing PMI came in at 54.0 when analysts had been expecting a 52.7 reading.
The Loonie also got some attention after Canada printed its monthly inflation data. Consumer prices cooled down in September thanks to lower oil prices and a decline in the Loonie’s value making imports expensive. Not good for an economy that already flirted with a mild recession early this year! Luckily for Loonie bulls, other factors like groceries and restaurant meals inched higher.
USD/CAD capped the session with a 106-pip gain (+0.81%) to 1.3176 while CAD/JPY also slid by 19 pips (-0.21%) to 92.16 and GBP/CAD popped up by 31 pips (+0.15%) to 2.0177.
Will we see more dollar-buying today? We don’t have any news reports lined up over the next couple of hours and New Zealand is out on a Labor Day holiday. It doesn’t mean that you shouldn’t watch your charts closely though!
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