The forex trading week has come and gone.
Time to take a look at what was driving forex price action.
Were you able to profit from any of this week’s top movers?
Looks like the Loonie was once again the main mover with half of the Top 10 Movers were CAD pairs, but this time to the downside!
And the euro had its fair share of volatility thanks to the European Central Bank!
Nothing but capital “L’s” for the Loonie across the board, first on a surprise turn to dovish rhetoric from the Bank of Canada, and then a round of weak economic data for that extra kick lower.
On Wednesday, the Bank of Canada released its latest monetary policy statement, holding its target overnight rate at 0.50%. Unfortunately for Loonie bulls, the rhetoric leaned once again to the dovish side as the BOC lowered its projected growth outlook, mainly on potentially slowing housing resale activity and export activity.
After an initial spike to the upside on the release, it was all downhill during the BOC press conference. And only a couple of sessions later when we got weaker consumer price index data and retails sales data did we get confirmation that the BOC’s dovish was warranted and a final push lower into the weekend.
With no major economic catalysts in the pipeline, the big catalyst of the week for the euro as the European Central Bank’s latest monetary policy decision and statement.
You can read more about the event in Forex Gump’s recap: “4 Things You Need to Know About the ECB’s Statement & Presser” but to sum it up, there was no major change to policy, and that we should stay tuned to the December meeting for the potential next decision on their quantitative easing program.
After seeing the reaction in the euro, it’s needless to say that forex traders did react to the potential for more easing beyond when the program is supposed to end in March 2017, a sentiment hinted by ECB President Draghi during the press conference.
On the other end of the spectrum, it was mostly gains for Sterling thanks to a heavy week of economic data. It was an initial push higher in the week thanks to a tick higher in inflation data on Tuesday, followed by mostly positive employment data on Wednesday where the employment rate remains at a record high of 74.5%.
Negative data did come around the corner to knock down Sterling lower in the form of weaker-than-expected retail sales and Public sector borrowing updates, and we even got bearish commentary from the Bank of England’s Chief Economist, Andy Haldane.
He said during a speech at the Cass Business School in London this week that around £300B boost in spending is coming, which may have contributed to the pullback, but it wasn’t enough to hold Sterling back from gains against most of the majors for the week.
A couple of events defined Aussie’s price action this week: the Reserve Bank of Australia’s latest monetary policy meeting minutes and the latest report on Australia’s employment situations.
First, the minutes from the latest RBA monetary policy meeting were overall less dovish than expected, citing better-than-expected GDP growth and a rise in terms of trade, likely a result of rising commodity prices and strengthening trading partners.
This the likely cause for the early Tuesday session rally, which was quickly turned around by a very disappointing Australian jobs report. Not only was there a negative net change in September’s numbers, but we also got downside revisions to August’s numbers as well.
You can read more about it in Forex Gump’s Aussie Jobs recap, but overall, we saw more downside than upside in the Australian dollar by the end of the week.
It was a moderately heavy weak of economic data for the U.S. dollar, most of which negatively to drag the Greenback lower in the front half of the week.
The heaviest weight on the Greenback was likely the latest data on consumer prices, showing only a rise of 0.1% in core consumer prices versus a forecast of 0.2% and a previous read of 0.3%. Declines in apparel, vehicle sales, and communications were the drag, taking the yearly read lower to 2.2%.
Fortunately for Greenback bulls, better-than-expected reads in U.S. building permits and the Philadelphia Fed manufacturing survey created fresh bullish sentiment, along with comments from New York Fed President William Dudley (and permanent FOMC voting member) that the Fed will likely raise interest rates later this year.
For the Kiwi, it was all “W’s” this week thanks to the better-than-expected Consumer Price Index data, showing that inflation rose by 0.2% versus the 0.1% forecast. It looks like this was enough for traders to pump the brakes on rate cut speculation and send the New Zealand dollar higher.
The Global Dairy Trade Price Index has also been pretty hot lately, printing a 1.4% increase in its latest release, a stat that’s important to Kiwis as dairy is 29% of New Zealand’s exports, by far the largest and most delicious among their exports.
CHF & JPY
It was a pretty quiet week for both the Swiss franc and Japanese yen as both countries lacked any economic data releases to speak of.
We did get commentary from Bank of Japan Governor Haruhiko Kuroda pushing back expectations of hitting price goals and no likely moves to reduce their quantitative easing programs.
But given that this is nothing new, it’s no surprise that Japanese yen price action moves were more on counter currency movement than developments from Japan.
This week’s scorecard: