Article Highlights

  • U.S. headline and core CPI up by 0.2% in Oct as expected
  • U.S. Oct industrial production down by 0.2% vs. estimated 0.1% gain
  • U.S. Oct capacity utilization down from 77.7% to 77.5% as expected
  • New Zealand dairy prices down 7.9% in GDT auction
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Mixed economic data from the U.S. led to a mixed forex performance by the Greenback, as it reacted mostly to currency-specific data ahead of the FOMC minutes release.

Major Events:

U.S. inflation and industrial production – Headline and core CPI came in line with expectations of 0.2% gains in October, suggesting that Fed rate hike expectations are still in play. Industrial production showed a downside surprise by dropping 0.2% in October against expectations of a 0.1% uptick while capacity utilization dipped from 77.7% to 77.5% as expected.

New Zealand GDT auction – Yep, the dairy industry slowdown ain’t over yet, folks! The latest Global Dairy Trade auction yielded a 7.9% fall in dairy prices, following the previous auction’s 7.4% drop and marking its third consecutive bi-weekly decline.

With that, Fonterra might announce another downgrade in milk payout forecasts, potentially leading to weaker revenues and spending among dairy farmers. Now that can’t be good for New Zealand’s economy which relies heavily on the dairy industry for exports and production.

Major Currency Movers:

USD – The Greenback was able to score gains against the yen, euro, franc, and Kiwi while giving up some ground against the rest of its forex peers. USD/JPY is up 16 pips to 123.33 (+0.14%), EUR/USD slid further below the 1.0700 handle to 1.0653 (-0.30%), USD/CHF rose 46 pips to 1.0143 (+0.46%), and NZD/USD is down 17 pips to .6472 (-0.26%).

Both the pound and Aussie were able to hold on to their lead, thanks to economic reports released earlier in the day, while the Loonie was supported by rising oil prices. AUD/USD is up 23 pips to .7118 (+0.34%), GBP/USD is up 12 pips to 1.5211 (+0.08%), and USD/CAD is down 13 pips to 1.3315 (-0.10%).

EUR – The euro was weaker across the board, as forex traders seem uneasy about the increased risks in the region. Word through the grapevine is that a potential terror attack in Germany was foiled ahead of another soccer match.

EUR/JPY is down 26 pips to 131.35 (-0.20%), EUR/GBP broke below the .7050 handle and is down to the .7000 mark (-0.40%), EUR/AUD slipped below the 1.5000 major psychological mark and is down 98 pips (-0.66%), and EUR/CAD is down 59 pips to 1.4183 (-0.41%).

Watch Out For:

  • Australia’s MI and CB leading indices for Sept at 12:30 am GMT
  • Australian quarterly wage price index at 1:30 am GMT (0.6% expected)

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