Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (May 6, 2014)

USD

The US dollar barely reacted to stronger than expected ISM non-manufacturing PMI yesterday. The index jumped from 53.1 to 55.2, surpassing the consensus at 54.3 and indicating a much stronger expansion in the services industry. US trade balance is up for release today and might show a smaller trade deficit, which could provide support for the Greenback. Other than that, risk sentiment is expected to be the main driver of forex price movement in the next few hours.

EUR

The euro is still stuck in consolidation to most of its major counterparts, as traders sit on the edge of their seats ahead of the ECB interest rate decision later on this week. Euro zone Sentix investor confidence was weaker than expected, as the reading slipped from 14.1 to 12.8 instead of improving to 14.2. EU officials lowered their euro zone growth and inflation forecasts as expected, lending more support to potential easing from the ECB. Spanish and Italian services PMI are due today, along with Spain’s employment change report.

GBP

The pound struggled to edge higher in recent trading as the lack of liquidity kept the currency in consolidation for the most part. UK traders return to their desks today from yesterday’s holiday and this might spark more action for pound pairs. UK services PMI is also due today and might show a rise from 57.6 to 57.9, indicating a stronger expansion in the industry which comprises a huge chunk of the country’s overall economic growth.

CHF

The franc was stuck in consolidation to the dollar during the recent trading sessions, thanks to the lack of catalysts from Switzerland. There are still no reports lined up for today, which suggests that more sideways movement might be seen. Traders could wait for Yellen’s speech in Congress tomorrow before deciding on the longer-term direction for USD/CHF.

JPY

The yen erased most of its recent gains in yesterday’s trading sessions as risk appetite picked up in the markets. Japanese traders were on holiday then and are still on holiday today, which suggests that overall market sentiment could be responsible for the yen’s price movement again.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made small rebounds in recent trading, as NZD/USD edged closer to the .8700 handle while USD/CAD tested 1.0950. Data from Australia and China have been weaker than expected and there were no reports released from Canada or New Zealand. Today, the RBA will make its rate decision and probably announce no monetary policy changes. However, downbeat remarks on the economy could lead to losses for the Aussie. Canadian trade balance and Ivey PMI are up for release in today’s US trading session, with a larger trade surplus and a lower manufacturing PMI expected. New Zealand quarterly employment data is also coming up and weaker hiring figures are expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 7, 2014)

USD

The US dollar gave up ground to most of its major counterparts right when the London session opened yesterday and risk appetite picked up. US data came in line with expectations as the trade balance showed a 40.4 billion USD deficit, smaller than the previous 41.9 billion USD shortfall. US preliminary non-farm productivity and labor costs data are up for release today but the bigger mover could be Fed Chairperson Yellen’s speech in Congress. Bear in mind that there was no press conference following the relatively hawkish FOMC statement last week and that this could be the chance to hear more remarks from the Fed head.

EUR

The euro continued to climb to the dollar and the yen in recent trading sessions, as data from the euro zone reflected a bit of stability. Spanish unemployment change and services PMI showed strong results, along with a better than expected euro zone retail sales reading. Italian services PMI merely came in line with expectations. German factory orders and French industrial production data are due today but this might not have such an impact on euro movement, as traders try to position ahead of tomorrow’s ECB rate statement.

GBP

The pound jumped to new highs against the dollar when the UK services PMI printed stronger than expected results. The index jumped from 57.6 to 58.7, outpacing the consensus at 57.9. There are no major reports lined up from the UK today but the positive sentiment could keep the pound supported ahead of the BOE rate statement tomorrow.

CHF

The franc advanced to the dollar after a brief period of USD/CHF consolidation, as market sentiment improved in recent trading. Swiss employment level data and foreign currency reserves are up for release today, which might spark a bit of franc weakness if the data comes up short of expectations.

JPY

The Japanese yen fell victim to risk appetite in recent trading but managed to advance against the US dollar. There were no reports released from Japan yesterday since it was still a banking holiday in the country but traders are ready to return to their trading desks today. The BOJ monetary policy meeting minutes were released and revealed a relatively optimistic outlook for the Japanese economy, despite the sales tax hike.

Commodity Currencies (AUD, NZD, CAD)

The comdolls raked in the gains when risk appetite improved in recent trading sessions, pushing NZD/USD past the .8700 mark and USD/CAD to test its previous lows. Data from Canada was actually weaker than expected, as the Ivey PMI and trade balance both missed expectations. New Zealand’s quarterly jobs report was mixed, as the employment change reading ticked up by a stronger than expected 0.6% but the jobless rate held steady at 6.0%. Australia’s retail sales was weaker than expected with a mere 0.1% uptick. Canadian building permits are up for release later on.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 8, 2014)

USD

The US dollar regained ground to most of its major counterparts in recent forex trading, as risk appetite waned. Not even Yellen’s relatively cautious speech was enough to force the dollar to retreat. The Fed head retracted her six-month rate hike forecast after asset purchases end, as she noted that there are still plenty of challenges facing the US economy. Preliminary non-farm productivity and unit labor costs both came in stronger than expected though. Initial jobless claims are up for release today, along with another testimony by Yellen.

EUR

The euro edged slightly lower to the US dollar and Japanese yen in the latest trading sessions when data from the euro zone came in below expectations. German factory orders slipped by 2.8% while French industrial production made a 0.7% decline. The main event for today is the ECB interest rate decision, with the central bank expected to announce easing measures or give dovish remarks on economic activity.

GBP

The pound retreated upon hitting the minor psychological resistance of 1.6950 to the US dollar, as the lack of data from the UK kept the bulls at bay. For today, the BOE interest rate decision is scheduled and this might push the pound back in rally mode if the remarks are dovish. Take note though that traders might opt to wait for the minutes of the monetary policy meeting to get more clues on future BOE moves.

CHF

The franc gave up most of its recent gains to the euro and the dollar as foreign currency reserves data showed that the central bank can still afford to defend its currency peg. The SNB has recently indicated that it will not hesitate to intervene if necessary, which convinced franc bulls to be a little more cautious. Swiss SECO consumer climate and CPI are up for release today and strong data could provide support for the Swissy.

JPY

The yen paused from its rally in yesterday’s trading sessions and lost ground to the Aussie and US dollar. It continued to consolidate to the pound and euro, as these currencies are awaiting central bank decisions. There have been no major reports released from Japan recently and none are due today, as the currency is being driven mostly by risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The New Zealand dollar posted massive losses yesterday when RBNZ Governor Wheeler warned that the central bank is ready to intervene if the Kiwi keeps rallying and winds up hurting inflation and exports. Recall that the latest dairy auction showed a decline in prices, which means that the Kiwi might be partly to blame for industry weakness. In Australia, the jobs report came in much better than expected with a 14.2K increase in hiring that allowed the jobless rate to hold steady at 5.8%. Canadian housing starts data is up for release later today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 9, 2014)

USD

The US dollar made a pretty strong recovery in recent trading as risk aversion returned to the markets. Initial jobless claims came in stronger than expected at 319K versus the estimated 328K increase in claimants, adding another boost to the dollar. For today, only the JOLTS job openings data is up for release and this might not move the dollar as much.

EUR

The euro had a volatile time during the ECB interest rate decision and press conference but eventually settled lower to most of its major counterparts. The ECB refrained from making an actual monetary policy adjustment but Draghi hinted that they could make a move in June if the CPI forecasts to be released earlier that month come in weak. Only medium-tier data are up for release from the euro zone today and this might not be enough to stop the shared currency’s selloff.

GBP

The pound retreated to most of its counterparts in the latest trading sessions when the BOE didn’t turn out to be as hawkish as some expected. Traders might need to wait for the minutes of the meeting to be released before understanding the monetary policy bias of the UK central bank and whether they’re ready to hike before the UK general elections, as Carney hinted. UK manufacturing production numbers are up for release today and a 0.3% uptick is eyed to follow the previous 1.0% increase.

CHF

The franc gave up its recent gains to the dollar when volatility picked up in the US trading session. Swiss CPI came in line with expectations of a 0.1% uptick but the SECO consumer climate fell from 2 to 1 instead of improving to 3 as expected. No reports are lined up from Switzerland today so it could be range-bound behavior for most Swissy pairs.

JPY

The yen had a mixed performance in recent trading sessions, as the lack of data from Japan left the currency reactive mostly to risk sentiment. The currency lost ground to the comdolls but gained against the euro, pound, and the US dollar. There are still no reports lined up from Japan today so more risk moves could be seen among yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a bit of a rebound in recent trading, as the Kiwi and Aussie staged recoveries from their recent losses. The Australian dollar got a stronger boost from upbeat jobs figures, as the economy added 14.2K jobs and kept the unemployment rate steady at 5.8%. Chinese trade balance also gave the Aussie support throughout most of the trading day. However, Chinese CPI came in slightly weaker today yet the Aussie remained steady. Canadian jobs data are due in today’s US trading session and an employment change figure of 12.8K is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 12, 2014)

USD

The US dollar had a mixed trading day before the week came to a close, as most traders booked profits off their dollar longs ahead of the key events this week. JOLTS job openings data was weaker than expected at 4.01M versus the estimated 4.21M reading and the previous 4.13M reading. Wholesale inventories was also worse than expected with a 1.1% increase versus the projected 0.5% uptick, indicating that stockpiles are higher and that there is a slack in purchases. Only a speech by Fed member Plosser is lined up for today, along with the release of the Federal budget balance.

EUR

The euro continued its descent to its major counterparts towards the end of the week, as traders positioned ahead of an ECB rate cut in June. Data from the euro zone was also weaker than expected since Germany reported a smaller than expected trade surplus. There are no reports due from the euro zone today but it’s likely that the selloff for the shared currency could continue.

GBP

The pound erased most of its recent gains despite stronger than expected manufacturing production and trade balance data. UK manufacturing production saw a 0.5% uptick, stronger than the estimated 0.3% gain but weaker compared to the previous 1.0% increase. The trade deficit shrank from 8.7 billion GBP to 8.5 billion GBP, reflecting an improvement in exports. Only the BRC retail sales monitor is due today and it might not have such a huge impact on pound direction.

CHF

The franc gave up most of its recent winnings as the US dollar took the limelight last Friday. There were no reports released from Switzerland then, leaving the franc at the mercy of risk sentiment. Swiss retail sales is due today and a 1.9% increase is expected, stronger compared to the previous 1.0% gain.

JPY

The yen managed to score wins to the euro and pound last week, despite the lack of top-tier data from Japan. Over the weekend, the current account balance release had a weaker than expected result. Economy Watchers sentiment data is due today and so is the M2 money stock, but yen pairs are more inclined to react to risk sentiment and country-specific data.

Commodity Currencies (AUD, NZD, CAD)

The comdolls edged slightly lower on Friday, as risk aversion took over the markets. In particular, the Loonie was the biggest loser among the three since Canada printed weak jobs data. Employment change slipped by 28.9K instead of increasing by the estimated 12.8K figure, keeping the jobless rate unchanged at 6.9%. Earlier today, Australia’s NAB business confidence index showed an improvement from 4 to 6, helping keep the Australian dollar afloat.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 13, 2014)

USD

The US dollar had a mixed performance in recent trading, as it consolidated to the euro and Canadian dollar but managed to extend its wins to the yen and the franc. There were no major reports released from the US economy, although the Federal budget balance showed a weaker than expected result. US headline and core retail sales data are up for release today and a weaker increase compared to the previous month’s data are expected. Headline retail sales might tick up by 0.5% while core retail sales could show a 0.6% gain.

EUR

The euro consolidated to the dollar and pulled up a bit to the Japanese yen as traders tried to evaluate their bias for the euro prior to the top-tier data this week. There were no reports released from the region yesterday and only the German ZEW economic sentiment figure is due today. The index could dip from 43.2 to 41.3, reflecting more pessimism in the country.

GBP

The pound edged lower to the dollar in recent trading but recovered to the Japanese yen. The BRC retail sales monitor showed a 4.2% rebound from the previous 1.7% decline, just enough to support the pound against most of its other forex counterparts. There are no major reports lined up from the UK today so it should be all about positioning ahead of tomorrow’s UK claimant count change release and BOE inflation report.

CHF

The franc continued to lose ground in recent trading despite the 3.0% jump in retail sales. The previous month’s figure was also revised to show a 1.2% annual gain, up from the initially reported 1.0% increase. There are no reports due from the Swiss economy today so franc pairs might be in for a bit of consolidation or more weakness if risk sentiment picks up.

JPY

The yen bowed down to most of its major counterparts when risk appetite improved in the Asian trading session. The Economy Watchers sentiment in Japan, however, showed a shift from optimism to pessimism for the economy. There are no reports due from Japan today so make sure you watch how the Nikkei closes to see how risk sentiment could impact yen pairs in the next trading sessions.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to hold steady in recent trading, thanks to the lack of market updates. NAB business confidence in Australia had a small improvement from 4 to 6 but the Aussie’s gains were erased today when both HPI and home loans data showed weaker than expected results. Coming up is New Zealand’s quarterly retail sales data, which might show a 0.9% uptick for both the headline and core figures. Chinese industrial production, fixed asset investment, and retail sales are also lined up for today. Another round of weak data could trigger risk aversion and be negative for higher-yielding commodity currencies.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 14, 2014)

EUR

The euro underwent another selling wave in recent trading when the Bundesbank expressed its support for further ECB easing. In an interview with the Wall Street Journal, an insider shared that the German central bank is willing to back negative deposit rates or further LTRO as the euro zone struggles to combat low inflation. German ZEW was much weaker than expected, as the index slipped from 43.2 to 33.1. Only medium-tier euro zone reports such as industrial production are due today and more signs of weakness could lead to more euro losses.

GBP

The pound was put on a weak spot in recent trading despite the lack of top-tier data from the UK. Perhaps traders are bracing for disappointment in today’s set of data, with the jobs report and the BOE inflation report lined up. Claimant count could drop by roughly 30K again in April, which should bring the jobless rate down to 6.8%. However, the bigger mover for the pound might be the inflation report, which should provide better clues on whether the central bank could be ready to tighten by the end of the year or early next year.

CHF

The franc was stuck in consolidation in recent trading, although with a few signs of weakness. There were no reports released from Switzerland yesterday and there are none due today, opening up the possibility of further consolidation for USD/CHF and EUR/CHF.

JPY

The yen took advantage of dollar weakness after the bleak US retail sales release in recent trading. It also advanced further to the euro and pound as risk appetite waned in the forex market. There were no reports released from Japan then and none are due today, which suggests that sentiment could continue to push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were in for mostly sideways movement thanks to the lack of major economic catalysts. Data from China and Australia were mostly weaker than expected, weighing on demand for the Australian dollar. New Zealand retail sales simply came in line with expectations, barely triggering any impact on the Kiwi. There are no reports due from these comdoll economies for the rest of the trading day.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 15, 2014)

USD

The lack of major catalysts from the US economy led the dollar to give a mixed performance in recent trading. It was able to pack gains against the pound but consolidated to the euro. US PPI data came in stronger than expected, with the headline figure printing a 0.6% increase and the core figure showing a 0.5% gain. For today, US CPI figures are due along with the initial jobless claims release. Core CPI could pick up by 0.1% while headline CPI could show a 0.3% uptick. US Empire State manufacturing index and Philly Fed index are also due today.

EUR

The euro struggled to hold on to its recent levels to the dollar but continued to lose ground to the Japanese yen. Euro zone industrial production came in line with expectations and showed a 0.3% decline in activity. There are plenty of major events in the euro zone today, with French and German preliminary GDP figures due. Euro zone flash GDP is expected to come in at 0.4%, higher than the previous 0.2% growth figure.

GBP

The pound gave up a lot of its recent gains when the BOE Inflation Report revealed that the central bank was no longer as hawkish as it used to be. BOE Governor Carney acknowledged the recent improvements in the economy but stopped short of increasing growth and inflation forecasts. He also said that a rate hike isn’t necessary to tame housing inflation, as there other fiscal measures that can be used. UK claimant count change also turned out to be a disappointment but the jobless rate still managed to improve to 6.8%.

CHF

The franc rebounded in the latest trading sessions, as the Swiss ZEW economic expectations index climbed from 7.0 to 7.4. Swiss PPI is due today and a 0.3% uptick is eyed to follow the previous flat reading. Stronger than expected results could reinforce the franc’s strength as it would ease fears of deflation in Switzerland.

JPY

The yen continued to gain ground in yesterday’s trading sessions as risk appetite waned. Data from Japan was stronger than expected, as the preliminary GDP reading came in at 1.5% instead of the estimated 1.0% growth figure. Tertiary industry activity showed a 2.4% gain in line with estimates. However, it remains to be seen how these figures could be affected by the latest sales tax hike.

Commodity Currencies (AUD, NZD, CAD)

Comdolls retreated in the previous trading sessions when risk appetite weakened. There were also no major reports from the comdoll economies to give these currencies support. In New Zealand, the Business NZ manufacturing index slipped from 58.0 to 55.2. Australia’s new motor vehicle sales stayed flat after declining by 0.3% in the previous month. Canadian manufacturing sales is due later on and a 0.2% uptick is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 16, 2014)

USD

Data from the US economy came in mixed yesterday, with manufacturing indices printing stronger than expected results and industrial production data coming in short. The Empire State manufacturing index showed a large improvement from 1.3 to 19.0, outpacing the consensus at 5.5, while the Philly Fed index dipped from 16.6 to 15.4 instead of falling to 13.9. Industrial production slipped by 0.6% even as analysts predicted a 0.4% uptick while TIC long-term purchases and capacity utilization data printed weaker than expected results. Building permits, housing starts, and preliminary UoM consumer sentiment data are due today.

EUR

The euro dealt with mostly weaker than expected GDP figures but gained a bit of ground when CPI data came in line with expectations. The core figure printed a 1.0% increase while the headline figure showed a 0.7% rise in price levels. Euro zone flash GDP was weaker than expected at 0.2% versus the estimated 0.4% growth figure while the previous quarter’s reading was revised lower. France reported a flat growth figure while Italy noted a 0.1% decline in GDP. Germany’s GDP was the only stronger than expected reading at 0.8%. French non-farm payrolls and euro zone trade balance are due today.

GBP

Data from the UK was light yesterday, as the CB leading index was the only report released. It showed a 0.3% increase, slower compared to the previous 0.4% rise. There are no reports due from the UK today, as the pound could continue to weaken on the change in BOE rhetoric recently.

CHF

The franc managed to hold steady to the dollar despite weaker than expected Swiss PPI. After staying flat in the previous month, producer prices declined in April instead of printing the estimated 0.3% uptick, reviving deflation concerns in the country. There are no reports due from Switzerland today.

JPY

The yen took advantage of the downturn in risk appetite recently, although consumer confidence in Japan weakened. The report showed that the figure dipped from 37.5 to 37.0 as expected. Japanese revised industrial production data is the only report on tap for today and this might not have such a huge impact on yen movement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls showed signs of weakness in recent trading as risk sentiment took a turn for the worse. Canadian manufacturing sales was better than expected at 0.4% though and foreign securities purchases are up for release today. There are no other reports due from the comdoll economies so it might be all about risk sentiment and yields for the comdoll pairs.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 19, 2014)

USD

The US dollar had a mixed performance on Friday, as the lower-yielding currency simply reacted to currency-specific events. Data from the US economy was mixed, as the UoM consumer sentiment figure fell short of expectations while the housing data turned out strong. Building permits climbed from 1.00 million to 1.08 million while housing starts rose from 0.97 million to 1.07 million in April. There are no major reports due from the US economy so it might be all about risk sentiment driving dollar pairs.

EUR

The euro made a small recovery on Friday as traders booked some of their profits before the end of the trading week. Euro zone data was mostly weaker than expected, with France reporting a 0.1% decline in quarterly non-farm payrolls and euro zone showing a smaller than expected trade balance. There are no major reports lined up from the euro zone today, except perhaps for a few speeches by key officials.

GBP

The pound continued to show signs of weakness last week as the change in BOE rhetoric weighed on the currency’s strength. There were no economic reports released from the UK then, leaving the currency with nothing to draw support from. There are still no reports due from the UK today so it might mean more weakness or consolidation among pound pairs.

CHF

The franc struggled to hold on to its current levels to the dollar in recent trading but it gave up a lot of ground to the Japanese yen. There were no major reports released from Switzerland then but the break of a major support area let the sellers in. There are no reports lined up from the country today.

JPY

The yen was generally stronger on Friday when risk aversion extended its stay in the currency market. Japan’s industrial production was revised higher and added to support for the currency. There are no reports due from Japan today so risk sentiment might be the driver of yen pairs for the next trading sessions.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi ended the week on a bleak note but these currencies managed to hold stead on Friday. The Loonie extended its wins to the dollar despite the weaker than expected foreign securities purchases data. For today, the comdoll schedule is empty so these currencies might be sensitive to market sentiment or might just stay in consolidation.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 20, 2014)

USD

The US dollar showed signs of strength in the past few trading hours as risk aversion gripped the financial markets once more. Martial law has been declared in Thailand and this kind of geopolitical tension usually turns out to be positive for the safe-haven dollar. There have been no reports released from the US economy in the latest New York trading session. Today, a bunch of Fed officials are scheduled to give testimonies and probably provide a preview of the FOMC minutes to be released later this week.

EUR

The euro managed to hold on to its recent levels to the US dollar, despite the downbeat remarks from Bundesbank President Weidmann. Of course he did stress that exchange rate targeting might wind up with harmful effects on the economy but he did point out that further easing might be needed, increasing the odds of an ECB stimulus announcement next month. German PPI is up for release today and a flat reading is eyed.

GBP

The pound made a small recovery in the past few trading sessions, as traders booked profits ahead of today’s CPI release. Price pressures probably improved in April, as analysts are expecting to see an increase in CPI from 1.6% to 1.8%. Underlying inflation might still point to weak spots though, with PPI input to stay flat and PPI output to show a mere 0.2% uptick.

CHF

The franc lost further ground to the dollar as risk sentiment worsened in recent trading. There have been no reports released from Switzerland yesterday and there are none lined up for today, which suggests that USD/CHF price action might depend on US events.

JPY

The yen had a mixed performance, as pairs simply reacted to currency-specific data. There were no reports released from Japan recently, except for the stronger than expected core machinery orders data. The Nikkei closed lower yesterday and reached new session lows, indicating that risk aversion is taking over price action, which is good for the lower-yielding yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened in the latest trading sessions, with the proposed budget cuts and downbeat RBA minutes weighing most on the Australian dollar. The Kiwi also saw its share of losses despite the stronger than expected PPI readings released in the early Asian trading session. Meanwhile, the Loonie managed to stay resilient but the wholesale sales release later today might change that as a mere 0.4% uptick is slated to follow the previous 1.1% gain.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 21, 2014)

USD

The US dollar drew support from risk aversion in yesterday’s trading sessions, as the declaration of martial law in Thailand brought geopolitical risk back in the mix. There were no reports released from the US economy but a few Fed officials gave speeches, providing a preview of how the upcoming FOMC minutes release might turn out. So far, the views have been mixed, with some supporting an earlier than expected rate hike and others suggesting that stimulus must be maintained. The FOMC minutes might contain nothing new, but traders are waiting for the actual speech by Fed head Yellen to see what the Fed has planned.

EUR

The euro erased some of its recent gains when German PPI printed weaker than expected results. Producer prices are down 0.1% in the euro zone’s largest economy, reviving fears of deflation in the region and leading to more calls of further easing next month. Only the euro zone current account and consumer confidence data are up for release today and these aren’t expected to have a huge impact on euro movement.

GBP

The pound recovered to its counterparts when UK CPI churned out stronger than expected results. The headline figure climbed from 1.6% to 1.8%, outpacing the consensus at 1.7%, while the core figure showed a 2.0% gain versus the estimated 1.8% increase in price levels. Today, the BOE will release the minutes of its latest monetary policy meeting and reveal whether they are still holding on to their rate hike bias or not. Recall that the BOE inflation report turned out to be a bit dovish and the minutes of their latest policy meeting might have the same tone.

CHF

The franc struggled to hold on to its recent gains but managed to chalk up a few losses to the dollar. There were no reports released from Switzerland then and none are due today, which suggests that further consolidation or risk off moves might be seen among franc pairs.

JPY

The yen advanced against most of its major counterparts when risk aversion returned to the markets in yesterday’s trading sessions. Traders don’t expect the BOJ to make any actual monetary policy changes today since Japan’s economic reports have been mostly strong so far. Of course this excludes the effect of the recent sales tax hike and data including this change might have more impact on yen direction.

Commodity Currencies (AUD, NZD, CAD)

Risk aversion got the better of the comdolls in recent trading, causing the Aussie, Kiwi, and Loonie to break below key technical levels against the dollar and the yen. Dovish RBA minutes and the Australian budget cuts weighed on the Aussie the most, pushing AUD/USD below the .9300 mark. Westpac consumer sentiment showed a 6.8% decline in Australia, leading to more losses for the currency. No other reports are lined up from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 22, 2014)

USD

The US dollar barely reacted to the minutes of the latest FOMC meeting, as the report revealed nothing new. Policymakers mentioned that they are not very concerned about accommodative monetary policy stoking inflationary pressures at the moment, as the CPI remains below the Fed’s 2% inflation target. However, they did start looking into gradual exit strategies involving short-term interest rates. The main takeaway from the minutes of the meeting is that the Fed is starting to consider how to slowly tighten monetary policy without shocking the markets. US existing home sales, initial jobless claims, and flash manufacturing PMI are due today.

EUR

The euro lost ground to the dollar again when the euro zone current account balance turned out weaker than expected at a surplus of 18.8 billion EUR instead of the estimated 24.2 billion EUR. German and French PMIs are up for release today and this might dictate whether the euro is in for a deeper selloff or not. Small downticks are expected for the manufacturing and services sectors of both economies, which would reflect a slower expansion in these industries.

GBP

The pound continued its ascent to the dollar when UK retail sales data showed stronger than expected results. A 1.3% increase was seen, higher than the projected 0.4% uptick, while the previous month’s reading enjoyed an upgrade. UK’s revised GDP figure is up for release today and an upward revision from the previously reported 0.8% reading might lead to more gains for the pound.

CHF

The franc chalked up small losses in the latest trading sessions as the lack of data from Switzerland weighed on the currency. There are still no reports due from Switzerland today, which suggests further consolidation or weakness for the franc.

JPY

The yen gave back its recent gains when risk appetite returned to the markets. The BOJ made no changes to monetary policy as expected but provided an upbeat outlook for capital expenditures. Earlier today, the freshly released Japanese manufacturing PMI showed an increase from 49.4 to 49.9, just a notch away from indicating industry expansion. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls recovered off their declines in recent trading when risk sentiment improved. Data from Australia actually showed weakness in the consumer sector while New Zealand’s credit card spending report reflected a slowdown. For today, Canadian retail sales data are due and might come in weak thanks to the recent drop in hiring.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 23, 2014)

USD

The US dollar sprang back to life in recent trading sessions, despite mixed data from the US economy. The flash manufacturing PMI surged from 55.4 to 56.2, outpacing the consensus at 55.6. However, existing home sales and initial jobless claims both fell short of expectations. Only the new home sales report is due from the US economy today and it might show a rise from 384K to 426K.

EUR

The euro resumed its drop to its major counterparts when euro zone PMI came in mostly below expectations. In particular, data from France was much weaker than expected since both manufacturing and services PMIs slipped back below the 50.0 level and indicated industry contraction. As for Germany, the manufacturing PMI showed a slower expansion while the services PMI showed a pickup. Overall, euro zone manufacturing PMI was below consensus while services was strong at 53.5. German Ifo business climate data is due today and a dip from 111.2 to 111.0 is eyed.

GBP

The pound gave back some of its recent gains when the public sector net borrowing report printed a higher government deficit. The report showed that borrowing was at 9.6 billion GBP versus the estimated 3.6 billion GBP figure while the previous month’s report received a downgrade. This revived fears of debt troubles in the UK and was enough for traders to ignore the UK revised GDP reading of 0.8%, which showed upgrades in consumer spending and business investment. There are no reports due from the UK today.

CHF

The franc continued to flash signs of weakness as there were no reports from Switzerland to give it a boost. There are still no reports due today so it should be all about franc weakness or consolidation until the end of the week.

JPY

The yen had a mixed day, as it lost ground to the pound but consolidated against most of its major counterparts. There were no reports released from Japan then and none are due today, which suggests that more currency-specific moves might be seen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a slower day yesterday as traders were undecided on how to play the recent changes in risk sentiment. An improvement in China’s HSBC manufacturing PMI brought gains earlier in the trading day but these soon fizzled out in the later trading sessions. Canadian retail sales came in weaker than expected, as the headline figure showed a 0.1% decline while the core figure printed a mere 0.1% uptick. Canada’s CPI reports are due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 26, 2014)

USD


The US dollar had a mixed performance at the end of the week as risk sentiment and profit-taking played key roles in dictating currency price action. US new home sales came in stronger than expected, giving the currency a bit of support during the New York session, as the figure showed a 433K gain versus the 425K estimate. There are no reports lined up from the US economy today as banks are on a Memorial Day holiday.

EUR


The euro continued to edge lower to its counterparts despite the recent credit rating upgrades. S&P upgraded Spain’s credit rating to BBB with a stable outlook while Fitch upgraded its rating for Greece from B- to B also with a stable outlook. Elections that took place over the weekend appear to have had a negative effect on the euro, as traders are also positioning ahead of the potential ECB stimulus announcement next month. Only ECB head Draghi’s speech is the major event lined up for today, but Germany is due to print its GfK consumer climate figure.

GBP


The pound showed signs of retreat towards the end of the trading week, despite the lack of data from the UK economy. There are no reports lined up from the United Kingdom today, as banks are closed in observance of Spring Bank Holiday, which suggests that the pound might be in for a bit of consolidation or further weakness.

CHF


The franc put up a good fight but eventually gave way to dollar strength on Friday, as there were no reports to give it any support. There are still no reports due today so the franc could continue to edge lower to its counterparts or be stuck in consolidation.

JPY


The yen was off to a turbulent start this week as pair spiked higher then eventually resumed their selloff. Minutes of Japan’s latest monetary policy meeting appear to have caused the sudden surge in volatility, although the report showed no major changes to policy biases. There are no other reports lined up from Japan today, leaving yen pairs mostly at the mercy of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)


The comdolls remained under selling pressure, with the exception of the Canadian dollar which was supported by CPI gains. The headline CPI showed a 0.3% increase while the core CPI printed a 0.2% rise. There are no reports lined up from Australia, New Zealand and Canada today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 27, 2014)

USD

The US dollar showed signs of weakness at the start of the week, as the absence of US traders who were on a Memorial Day holiday left the dollar with very little support. There were no reports released from the US economy then as banks were also closed for the holiday. Durable goods orders data are due today, with the headline figure likely to show a 0.5% decline and the core figure set to print a 0.2% uptick. The previous month’s readings were revised higher though so this should provide a bit of backing for the U.S. currency unless the actual figures come up short.

EUR

The euro recovered in recent trading despite the recent election results showing a landslide victory among EU critics. For many, this led to hopes that better reforms could be implemented when it comes to tackling the economic slowdown and government budget problems. GfK German consumer climate data showed the expected 8.5 reading, which revealed no change in sentiment. For today, there are no reports due from the euro zone but ECB head Draghi has a testimony scheduled.

GBP

The pound bounced back to action despite the lower liquidity with UK traders off on Spring Day holiday. There were no reports released from the UK then and only the BBA mortgage approvals report is up for release today. Lower mortgage approvals of 45.2K are eyed versus the previous 45.9K figure, which might lead the pound to return some of its recent wins.

CHF

The franc took advantage of dollar weakness in recent trading but it appears that the rally was merely a retracement. Swiss trade balance is due today and it might show a bigger surplus of 2.43 million CHF from the previous 2.05 million CHF, which might lend more support for the franc.

JPY

The yen lost ground to its counterparts as risk sentiment picked up and traders started pricing in the possibility of seeing weak data from Japan later on this week. Take note that this will be the first set of reports which include the impact of the April sales tax hike so declines are expected. For now though, Japan’s economic calendar is empty.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained composure in recent trading sessions as risk sentiment improved. There were no reports released from the comdoll economies yesterday and none are due today, suggesting that more risk-based moves might be seen.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 28, 2014)

USD

The return of US traders from their Memorial Day holiday lent support to the dollar, along with stronger than expected headline durable goods orders data. The report showed a 0.8% increase in orders while the core version printed a mere 0.1% uptick. Traders might be positioning ahead of tomorrow’s preliminary GDP release, which could show a downward revision and an economic contraction, as there are no major reports due from the US economy today.

EUR

The euro lost ground to the dollar again as Draghi reiterated the potential of further easing if inflationary pressures remain weak. There were no actual reports released from the euro zone then. For today, French consumer spending and German employment change figures are due. Retail sales could rise by 0.5% in euro zone’s second largest economy while its largest economy might print a 14K drop in joblessness. Weaker than expected data might lead to further losses for the euro.

GBP

The pound gave up most of its recent gains when London traders returned from their Spring Day holiday. BBA mortgage approvals were weaker than expected at 42.2K versus the estimated 45.5K figure and the previous 45.9K reading. Only the CBI realized sales report is due today and it might show an improvement from 30 to 36, enough to give the pound a bit of support.

CHF

The franc caved to dollar strength again as Swiss reports simply came in line with expectations. The trade balance showed a surplus of 2.43 billion CHF, although the previous month’s figure was revised down to 2.00 billion CHF. The employment level held steady at 4.19 million, a bit off the estimated 4.21 million reading. Swiss first quarter GDP and UBS consumption indicator are due today, with the growth figure likely to show a 0.6% uptick and consumption to show a small improvement.

JPY

The yen took advantage of the run in risk aversion recently, as it regained ground against most of its counterparts. Talks of an exit strategy from the BOJ’s stimulus program also added support to the yen. However, traders quickly exited their yen longs as they started pricing in declines for this week’s set of data, which includes the April sales tax hike effect.

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to hold on to their current levels when risk aversion revisited the markets yesterday. Australia’s MI leading index showed a 0.5% decline while the ANZ business confidence index in New Zealand showed a large drop from 64.8 to 53.5. Australia’s HIA new home sales and private capital expenditure are the only reports lined up for the next few hours.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 29, 2014)

USD

The US dollar dominated against its major forex counterparts in recent trading, as US bond yields renewed demand for the currency. There were no reports released from the US economy yesterday while today has the revised GDP reading, initial jobless claims, and pending home sales data on tap. The Q1 GDP figure could see a downward revision from 0.1% to -0.6%, which could be negative for the US dollar. Initial jobless claims might dip from 326K to 321K while pending home sales could chalk up a 1.1% gain.

EUR

The euro fell to its major counterparts when data from Germany and France missed expectations. French consumer spending slipped by 0.3% instead of gaining by the estimated 0.5% figure while Germany showed a 24K rise in joblessness instead of the 14K projected decline. Euro zone economies are on holiday today which means thinner liquidity and possibly higher volatility in today’s London trading session. There are no major reports up for release from the region.

GBP

The pound made a strong break below a significant support area against the dollar, signaling that longer-term losses might be in the cards. UK CBI realized sales slipped from 30 to 16 instead of improving to the forecast at 36. Only the GfK consumer confidence index in the UK is due today and a small improvement from -3 to -2 is eyed, reflecting a lower degree of pessimism, but a weaker than expected result might lead to a deeper pound selloff.

CHF

The franc struggled to hold on to its recent gains and managed to reduce its losses despite the weaker than expected Swiss GDP reading for the first quarter. The economy grew by 0.5% instead of the estimated 0.6% reading, but this was still stronger compared to the previous 0.2% GDP figure. There are no reports due from Switzerland today as Swiss banks are on holiday.

JPY

The yen continued to gain ground against its counterparts on the heels of BOJ optimism, but gave up some wins when the retail sales figure showed a 4.4% decline. Take note that this includes the April sales tax hike effect and that markets are expecting further weakness in the upcoming reports. Household spending, CPI, industrial production, and the jobless rate are due in tomorrow’s early Asian trading session.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi was a big loser in recent trading as NZD/USD broke below a key support level. Fonterra announced that it would reduce payouts to producers and estimated lower milk prices in the coming months, possibly enough for the RBNZ to downgrade its growth and inflation forecasts and rethink its hawkish stance. In Canada, the current account reading is up for release but traders might sit on their hands ahead of tomorrow’s GDP report. Australia reported a 4.2% decline in quarterly private capital expenditure, worse than the estimated 1.6% drop.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 30, 2014)

USD

The US dollar continued to advance against most of its major currency counterparts in recent trading as risk aversion haunted the financial markets. However, weak data from the US economy led to a bit of a selloff, as the GDP reading was revised down from 0.1% to show a 1.0% economic contraction. Initial jobless claims were better than expected but pending home sales were weak. For today, data on personal spending and income, core PCE price index, revised consumer sentiment, and Chicago PMI are due. Another round of weak figures could lead to a deeper dollar selloff.

EUR

Euro bears ganged up on the shared currency in recent trading sessions, despite the absence of most London session traders who were on an Ascension Day holiday. There were no reports released from the euro zone then while today has German retail sales on tap. Given that jobs data in the euro zone’s largest economy was much weaker than expected, consumer spending reports might also show weak figures. Analysts expect to see a 0.4% uptick to follow the previous month’s 0.7% decline.

GBP

The pound made a bit of a recovery but was unable to hold on to most of its recent gains. There were no reports released from the UK yesterday, suggesting that the bounce was due to profit-taking, and there are no reports due today. Pound pairs might consolidate or keep weakening in light of the change in BOE rhetoric to a less hawkish bias.

CHF

The franc slid lower to the dollar in recent trading, as Swiss traders took off on a holiday yesterday. The KOF economic barometer is up for release today and a small improvement from 102.04 to 102.05 is eyed. Weaker than expected data could lead to more losses for the franc while a strong rebound could lead to a rally.

JPY

The yen gave up some of its recent gains when most reports from Japan showed weakness due to the sales tax hike. Household spending and retail sales were both much weaker than expected while core CPI surged to a record high level of 3.2%. However, these are just knee-jerk reactions to the sales tax hike and the data could level off in the next few months.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a bit of recovery in the past few trading hours, possibly due to profit-taking ahead of the weekend and end of the month. There were no major reports from both Australia and New Zealand, but Canada has its monthly GDP reading on tap. A 0.1% growth figure is eyed, which might be enough to lead to a 1.7% quarterly growth. Strong figures could add support to the Loonie in the next few days.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (June 2, 2014)

USD

The dollar continued its dominance on Friday as risk aversion stayed in the financial markets. Small bounces among major forex pairs were seen towards the end of the US session, as traders booked profits ahead of this week’s top-tier events and central bank statements. As for the US economy, data was mixed on Friday as personal spending slipped by 0.1% but personal income showed a 0.3% uptick. Chicago PMI was stronger than expected at 65.5 while consumer sentiment was revised down to 81.9. For today, US ISM manufacturing PMI is up for release and an improvement from 54.9 to 55.7 is expected.

EUR

The euro sold off to most of its major counterparts on Friday as traders started pricing in the possibility of seeing further easing form the ECB this week. Data from the euro zone was very weak, with Germany reporting a 0.9% decline in retail sales. Spanish flash CPI was weaker than expected at 0.2% while Italy’s CPI showed a 0.1% decline in price levels. This ups the odds for a weaker euro zone CPI forecast, which might be enough for traders to price in QE from the ECB on Thursday’s announcement.

GBP

The pound was still weak to the dollar but did show some signs of a rebound. There were no reports released from the UK on Friday, which explains why the currency was unable to draw much support. Net lending to individuals and mortgage approvals are up for release today and weak figures might lead to more pound selling ahead of the BOE rate statement later this week.

CHF

The franc showed signs of a recovery on Friday, mostly because traders booked profits at the end of the month. Switzerland’s economic data was actually weak, as the KOF economic barometer showed a decline to 99.79 while the previous period’s reading was downgraded to 101.81. SVME PMI is due today and a small dip from 55.8 to 55.7 is eyed, but a weaker reading might lead to more franc losses.

JPY

The yen sold off to most of its counterparts on Friday, as traders digested the weakness shown by the recent Japanese data incorporating the effect of the April sales tax hike. The rise in inflation was promising but traders though that the impact on spending might be short-lived, leading to a bit of support for the yen at the end of the day. Capital spending was stronger than expected. There are no other reports due from Japan today, which suggests that yen pairs might be sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

Performance of the comdolls was mixed on Friday, as the Loonie and Kiwi weakened while the Aussie rallied. Data from Canada was weaker than expected, as the GDP report showed quarterly growth of only 1.2% while the previous quarter’s GDP reading was revised lower. Australia’s building approvals report showed weakness earlier today, undoing some of the Aussie’s recent gains. Trading among these pairs might be quiet today, with no other reports on tap and with traders gearing up for the RBA statement and Australian retail sales release tomorrow.

By Kate Curtis from Trader's Way