U.S. Session Forex Recap – Jan. 4, 2016

Article Highlights

U.S. initial jobless claims: 287K vs. 270K expected, 267K previous
US Chicago PMI: 42.9 vs. 50.0 expected, 48.7 previous
China manufacturing PMI: 49.7 vs. 49.9 expected, 49.6 previous
China non-manufacturing PMI: 54.4 vs. 53.6 previous
AIG manufacturing PMI: 51.9 vs. 52.5 previous

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Dollar domination was the name of the game during the U.S. session, as forex traders got more confident about pricing in the Fed’s rate hike.

Major Events:

Dollar domination – With the major markets out on New Year’s Day holiday, most of the action happened on December 31. In case you were too busy planning your New Year’s Eve celebrations, you should know that dollar warriors shrugged off weak U.S. data in favor of more dollar gains.

Uncle Sam got away with printing weaker-than-expected economic data. The initial jobless claims rose from 267,000 to 287,000 when analysts had only expected a 270,000 figure. Ditto for the Chicago PMI, which clocked in at 42.9 when market players had expected an expansionary reading of 50.0.

End-of-year flows – A quick look at the charts shows us that the yen, franc, and pound also saw some action. With no major catalysts in sight, the strong moves could be attributed to traders unwinding their 2015 positions.

Major Currency Movers:

USD – The Greenback edged higher against its counterparts, with EUR/USD slipping by 21 pips (-0.19%) and AUD/USD falling by 24 pips (-0.33%).

JPY – The yen was also a clear winner with USD/JPY losing 19 pips (-0.16%), EUR/JPY falling by 44 pips (-0.34%), and AUD/JPY closing 33 pips (-0.38%) lower than its session open price.

GBP – Despite a lack of catalysts, the pound saw significant losses throughout the session. GBP/USD fell by 79 pips (-0.53%) while GBP/JPY dropped by a mean 129 pips (-0.72%). Heck, even EUR/GBP popped up by 25 pips (+0.34%).

CHF – Last but not the least is an interesting intraday uptrend for franc pairs. The low-yielding currency lost against most of its forex friends even though there were no catalysts to warrant a move. Is that SNB intervention I smell?

USD/CHF popped up by 60 pips (+0.60%) while EUR/CHF inched 43 pips higher (+0.40%). Interestingly, even CHF/JPY fell by 89 pips (-0.74%) throughout the session.