Article Highlights

  • U.S. initial jobless claims at 264K vs. 267K expected
  • U.S. wholesale inventories up by 0.6% vs. 0.1% forecast
  • Goldman Sachs upgraded U.S. Q2 GDP forecast from 2.9% to 3.2%
  • BOC Gov Poloz: Canadian economy is working through oil price shock
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Is risk aversion back on? The lower-yielding currencies made a comeback in the U.S. trading session even though there were no major reports released.

Major Events:

BOC Governor Poloz’s testimony – The head honcho from the Bank of Canada had a speech lined up after the release of the central bank’s Financial System Review so his remarks were mostly focused on financial risks in the housing sector. In particular, Poloz noted that lenders should note stoke the property bubble by predicting house price gains.

In terms of the economy, he did mention that Canada is working through the oil price shock. Although he also acknowledged that the Alberta fires could pose a short-term risk to growth, he pointed out that weak oil prices aren’t so much of a concern compared to the imbalances in the housing sector.

Mixed U.S. data – I’m seeing green and red from Uncle Sam, as the latest set of economic releases printed mixed results. On one hand, initial jobless claims came in a tad better than expected at 264K versus the projected 267K reading, reflecting positive hiring momentum. On the other hand, wholesale inventories rose 0.6% versus the estimated 0.1% uptick, which means that goods are simply being kept in stockpiles possibly due to lower purchases.

Major Currency Movers:

JPY – The lower-yielding Japanese yen took a big bite out of the risk-off pie but eventually returned most of its gains on profit-taking.

EUR/JPY hit a low of 120.32 then climbed back to a high of 121.36, AUD/JPY tumbled to a low of 79.09 before recovering to 79.75, GBP/JPY dipped below the 154.00 handle then zoomed up to 155.00, CAD/JPY dropped to a low of 83.44 then clawed its way back to the 84.00 levels.

USD – The U.S. dollar had much better luck than the yen as it was able to hold on to its gains for the session.

EUR/USD fell straight down from the 1.1350 area to a low of 1.1300, GBP/USD is testing support at the 1.4450 minor psychological mark, USD/JPY climbed from a low of 106.37 to a high of 107.17, USD/CHF pulled up to the .9650 level, AUD/USD is down to .7415, and NZD/USD is treading carefully at .7100.

Watch Out For:

  • Chinese banks closed on a holiday
  • 4:30 am GMT: Japanese tertiary industry activity (+0.7% expected, -0.7% previous)

See also:

Asian Session Recap

London Session Recap

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Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!