15 February 2017 at 22:43 GMT
- Australia: Consumer Inflation Expectations (1900 GMT)
- Australia: Employment Report (1930 GMT)
US data released
- NY Empire State Manufacturing Index – February (18.7 vs forecast 7.0)
- Retail Sales – January (actual 0.4% vs. forecast 0.1%, ex-autos actual 0.7% vs. forecast 0.4% m/m)
- CPI – January (actual 0.6% vs. forecast 0.3%
- Capacity Utilisation – January (actual vs. forecast 75.6%)
- Industrial Production– January (actual -0.3% vs. forecast 0.1%)
- EIA Crude Stocks Change (Actual 9.527 million barrels vs. previous 13.830 m/b)
Charles Dickens classic novel, A Tale of Two Cities opens with: “It was the best of times, it was the worst of times”. With apologies to Dickens, Wednesday's New York session can be described as: “It was dollar up time, it was dollar down time”.
New York traders sat down at their desks to find an FX market still basking in the glow of the prior day’s hawkish sounding comments from Federal Reserve chair Janet Yellen. EURUSD was sitting at 1.0557 and USDJPY parked at 114.40 ahead of a large dump of key data. Retail sales and CPI prints were well above forecasts. That supported the view of a strengthening US economy and the US dollar rallied.
EURUSD dropped to 1.0552, GBPUSD fell from 1.2420 to 1.2382 and USDJPY rose to 114.95. And then it was over. Suddenly the dollar buyers became dollar sellers. EURUSD rallied to 1.0608 (just above where it finished), GBPUSD spiked to 1.2478 and USDJPY fell to 113.85.
Why the change of heart? There wasn’t any reason other than perhaps a bout of profit-taking with traders thinking that Tuesday’s dollar rally may have been a tad overdone. Even after today’s move, the US dollar is well above Friday’s closing values.
AUDUSD and NZDUSD rejected early morning weakness and rallied throughout the day to close at the high. USDCAD finished unchanged on the day.
Oil prices soared and sank with WTI trading in an erratic $52.77-$53.49/b range. This morning’s Energy Information Administration report of another rise in US crude inventories appeared to have been ignored with traders tracking US dollar moves.
Wall Street closed higher again. Traders ignored hawkish rhetoric from Boston and Philadelphia Fed Presidents. Yellen didn’t offer anything new in her testimony.
Erasing the gains ... the USD finished the day with losses against the majors. Photo: Shutterstock
– Edited by Gayle Bryant
Michael O'Neill is an FX consultant and currency strategist at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.