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The current mixture of strong macroeconomic signals and what is expected to be a strong showing from today's nonfarm payrolls report is flashing a "green light" to Federal Reserve hawks. Meanwhile, fear of Sunday's Italian vote seems to be fading.
Article / 18 October 2016 at 21:57 GMT

US Market Wrap: Dollar drifts higher with equities in focus

FX Consultant / IFXA Ltd
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Watchlist

  • Australia: Mid-Year Economic and Fiscal outlook     0030 GMT

US data released

  • CPI-September (Actual 0.3% vs. forecast 0.3%, Core, Actual 0.1% vs. forecast 0.2%, m/m) 
  • NAHB Housing Market Index-Oct. (Actual 63 vs. forecast 63)  
  • API Weekly Crude Stocks Change (Actual -3.8 m/b vs previous 2.7 m/b) 

It was another day of choppy FX trading. EURUSD retraced almost all of Monday’s gains, although it is a narrow 1.0960-1.1025 range.  USDJPY see-sawed in a 103.75-104.20 band. Sterling flat-lined but managed to keep most of its European session gains. The real story for the day was that there wasn’t a real story. FX traders are looking for direction.

Today’s US CPI data didn’t provide any direction or guidance although the US dollar appeared to catch a whiff of a bid following the release. There was chatter in some circles that the massive Saudi Arabia bond offering created a bit of demand as Treasury yields moved higher.

Kiwi got wings following the better than expected GlobalDairyTrade auction but those wings got clipped. NZDUSD dropped back to 0.7187, near where it was before the news was released. A steep drop in WTI prices bounced USDCAD from 1.3056 to 1.3136.

Oil prices dipped then doodled higher. WTI was bid at $50.50 at mid-morning supported by the European rally when it plunged to $49.75 just ahead of the option expiry time. It then inched higher throughout the day and closed at $50.42. The API Crude Stocks change report of a large draw-down set WTI to $50.76 in after-hours trading.

US equity indices were all higher supported by strong earnings reports. Goldman Sachs (GS: NYSE) minted gold, announcing a bottom line profit gain of 58% in the third quarter.

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Choppy session. The day's FX trading saw EURUSD retrace almost all of Monday’s gains
while USDJPY see-sawed in a 103.75-104.20 band. Photo: iStock 

Opinion

The risks to sterling are to the topside writes TradingFloor contributor Neil Staines in: 'There is but one rule: Hunt or be hunted'.

– Edited by Gayle Bryant

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 and our Asia session our regular European Morning Markets, From the Floor and Mid-session Europe.
18 October
seas seas
Can't tell you how much I enjoy and value your posts Mike. Great job as always.
19 October
fxtime fxtime
Agree Seas :-)
19 October
Michael O'Neill Michael O'Neill
Thanks guy, its appreciated
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