Article Highlights

  • U.S. ISM non-manufacturing PMI up from 51.4 to 57.1 vs. 53.1 consensus
  • U.S. ADP non-farm employment change at 154K vs. 166K forecast
  • U.S. factory orders up by 0.2% vs. 0.4% decline expected
  • U.S. trade deficit widened from $39.5B to $40.7B vs. $41.1B forecast
  • Canadian trade deficit narrowed from 2.2B CAD to 1.9B CAD vs. 2.5B CAD consensus
  • U.S. crude oil inventories down by 3.3 million barrels
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The Japanese yen continued to bleed while the Greenback edged slightly higher, supported by mostly stronger than expected U.S. economic data.

Major Events:

Mostly upbeat data – Forex junkies seem to be getting their hopes up for an upbeat NFP release later this week after the ISM non-manufacturing PMI also came in higher than expected.

The September reading surged from 51.4 to 57.1, outpacing the 53.1 consensus to show a much faster pace of industry expansion. Components of the report showed a strong gain in the employment sub-index (50.7 to 57.2), as well as new orders and business production.

Meanwhile, the ADP non-farm employment change came in short of expectations with a 154K gain for September instead of the projected 166K reading. This is also lower compared to the August figure, which was downgraded from 177K to 175K, suggesting potential revisions in earlier NFP readings.

Factory orders for August surprised with a 0.2% uptick instead of the estimated 0.4% decline, but the previous reading was revised lower from 1.9% to 1.4%. The trade deficit widened from $39.5 billion to $40.7 billion, reflecting slower export activity, but still smaller than the estimated $41.1 billion shortfall.

Crude oil price rally – The U.S. Energy Information Administration reported a draw of 3.3 million barrels in crude oil stockpiles for the previous week, marking its fifth consecutive weekly decline. Analysts had been expecting to see an increase of 1.1 million barrels in inventories so the reduction in supply spurred a strong rally for the commodity, bringing WTI crude oil near $50/barrel.

Major Market Movers:

JPY – Yen bears are still at it, giving more upside momentum to the recent breakouts in yen pairs.

USD/JPY is up from 103.07 to a high of 103.67 (+0.58%), EUR/JPY climbed from 115.60 to a high of 116.22 (+0.53%), GBP/JPY bounced from 131.11 to 132.16 (+0.80%), AUD/JPY carried on with its rally from 78.45 to 79.01 (+0.71%), and CAD/JPY popped up from 78.06 to 78.70 (+0.82%).

Watch Out For:

  • Chinese banks closed for the holiday
  • 12:30 am GMT: Australian trade balance (-$2.32B AUD expected, -$2.41B AUD previous)

See also:

London Session Recap

Asian Session Recap

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