Article / 31 May 2016 at 22:39 GMT

US Market Wrap: Dollar bulls take charge after month-end forex follies

FX Consultant / IFXA Ltd


  • Australia: AIG Performance of Manufacturing Index                 2330 GMT                                                                                      
US Data released:

  • Core Personal Consumption Expenditure, April (Actual 0.2% versus forecast 0.2% m/m)
  • S&P Case-Shiller Home Price Index, March (Actual 5.4% versus forecast 5.2%, y/y)
  • Chicago PMI, May (Actual 49.3 versus 50.9)
  • Consumer Confidence, May (Actual 92.6 versus forecast 96.0)

The month-end forex follies didn’t disappoint. Rumours of the dollar’s demise due to portfolio rebalancing flows for the 1600 GMT fix were not exaggerated and the dollar sank. It then had a moment in the sunshine following the release of US data. US consumer spending was stronger than guessed and core inflation was steady.

However, intraday US dollar selling overshadowed the data until the fix was dealt with. Then the dollar rallied, and in some cases it rallied rather hard.

GBPUSD was the biggest loser. It dropped from 1.4650 through the European low and settled at 1.4475, all because of a Daily Telegraph ORB poll that reported the EU “stay” lead was narrowing.

EURUSD returned to the European bottom on renewed Fed rate hike concerns. The Canadian dollar got triple-whammied. USDCAD rallied on poor domestic GDP data, falling oil prices and Fed rate hike concerns.

Today’s US data receipts were prey for US rate hawks. They were tasty appetizers leading up to the June 15 feast. US dollar bulls were out in force.

US equity indices finished the month with gains although today’s action was unimpressive. Equities closed the day around flat. It was a bad day for Dell founder Michael Dell and Silver Lake Partners. A Delaware judge ruled that they had underpriced their 2013, $24.9 billion buyout of Dell Inc. (by 22%). Now that’s going to leave a mark

The pound lost ground against the dollar after a media poll showed that the lead enjoyed by the stay in the EU side was narrowing. Photo: iStock

Trade: Aussie bulls may be interested in Trading Floor contributor, Clive Lambert's trade: Is the Aussie battler about to make a comeback?

– Edited by Robert Ryan

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.

Missed a day? Here’s what we had to say during our Asian session and our regular European Morning Markets, From the Floor and Mid-session Europe.


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