Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Aug 24, 2015)

USD

The US dollar suffered a sharp selloff against the yen and the euro, mostly due to the bloodbath in the equity market. Apart from that, lower odds of a Fed rate hike in September are also leading investors to close off their long dollar holdings. Data from the US was weaker than expected, with the flash manufacturing PMI falling from 53.8 to 52.9 instead of ticking up to 53.9. There are no reports due from the US today but FOMC member Lockhart is set to testify.

EUR

The euro managed to advance against most of its forex rivals despite the slump in European equity markets last week. News that Greece finally got its hands on the third set of bailout funds and paid its obligations to the ECB was able to spur a relief rally for the shared currency while PMI readings from the top economies showed resilience. Most of the manufacturing and services PMIs from Germany and France came in line with expectations and showed small improvements. There are no reports due from the euro zone today.

GBP

The pound was also able to rake in some gains against its rivals, except for the Japanese yen. Data from the UK was closely in line with expectations, as the public sector borrowing report showed a surplus instead of a deficit. Apart from that, rate hike expectations from the BOE are still in play, providing the pound support against the commodity currencies. No reports are due from the UK today.

CHF

The franc took advantage of dollar weakness last Friday and was also able to make profits in the name of risk aversion. There have been no reports released from Switzerland then, but the franc also got a boost from euro zone PMI readings. No reports are due from the Swiss economy today.

JPY

The yen was a big winner last Friday, thanks to the surge in risk aversion spurred by the equity market selloff. There have been no major reports released from Japan, but traders flocked to the lower-yielding currency as Asian markets tumbled. There are still no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi managed to stem their losses against the dollar but gave up a lot of ground to most of their major counterparts. Oil prices fell below the $40/barrel level, triggering further losses for the Canadian dollar. Retail sales figures from Canada came in better than expected while the CPI readings were in line with consensus.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 25, 2015)

USD

The US dollar had a mixed performance in recent trading, as it suffered a sharp selloff then rebounded later on. It was able to advance against the commodity currencies but paled in comparison to the yen and European currencies. There have been no major reports out of the US yesterday but it looks like the global equity meltdown might be enough to force the Fed to delay their liftoff to December or even next year. US CB consumer confidence, flash services PMI, and new home sales data are up for release today.

EUR

The euro was able to score gains against most of its forex rivals, although it gave up some ground to the lower-yielding dollar and yen. There have been no reports out of the euro zone yesterday, but it looks like the end of the Greek debt drama has allowed the shared currency to rally. German Ifo business climate numbers are up for release today and analysts are expecting the index to dip from 108.0 to 107.6.

GBP

The pound managed to hold steady against the dollar and advance against the comdolls but was no match to yen and euro strength. There have been no reports released from the UK yesterday, leaving the pound to draw support from the relatively hawkish BOE stance and improved UK fundamentals. There are still no reports lined up from the UK today.

CHF

The franc was able to outpace the dollar and the commodity currencies, despite the lack of data from Switzerland. It seems that the threat of SNB intervention is still keeping the Swissy’s gains limited but it has taken advantage of the risk-off market environment. Swiss employment level data is due today and a climb from 4.23M to 4.24M is eyed, which might mean more gains for the franc.

JPY

The yen continued to rally against its forex rivals in recent trading sessions, thanks to the risk-off environment and sharp selloff in Asian equities. There have been no reports released from Japan yesterday and none are due today, suggesting that the yen could keep reacting to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still the weakest of the bunch, as the stock market selloff dampened demand for commodities and higher-yielding currencies. There were no reports out of Australia, New Zealand, and Canada yesterday while today has the Australian and Chinese CB leading index. The former showed a 0.2% decline while the latter showed a 0.9% increase. Also released today was New Zealand’s quarterly inflation expectations which stayed unchanged at 1.9%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 26, 2015)

USD

The US dollar made a pretty strong rebound during the New York trading session, as equities showed a recovery. Data from the US came in mixed, with the CB consumer confidence index climbing from 91.0 to 101.5 and outpacing the consensus at 92.8. New home sales came in short of expectations but still showed a gain from 481K to 507K. Durable goods orders data is due today and a 0.4% decline in the headline figure is eyed while the core figure could show a 0.3% uptick. FOMC member Dudley is set to testify today and his remarks could influence Fed rate hike expectations.

EUR

The euro weakened slightly but soon resumed its bounce against its forex rivals when European equities showed gains. Data from the euro zone was better than expected, as Germany showed a climb from 108.0 to 108.3 in its Ifo business climate index instead of printing a decline to 107.6. There are no reports due from the euro zone today.

GBP

The pound gave up ground to the dollar but managed to regain ground against the commodity currencies. There have been no reports released from the UK yesterday while today has only medium-tier data on tap. BBA mortgage approvals and the CBI realized sales report are lined up, with strong readings likely to spur pound rallies.

CHF

The franc gave up ground to the dollar in recent trading sessions, despite Swiss data coming in line with expectations. The employment level climbed from 4.23M to 4.24M in the latest quarter, signaling jobs growth. There are no reports due from Switzerland today.

JPY

The yen continued to advance against its forex counterparts when risk appetite remained weak during the Asian trading session. Chinese and Japanese equities continued to chalk up losses, before the PBOC decided to announce an interest rate cut. There have been no reports released from Japan lately and none are due today, indicating that risk sentiment could continue to push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still on weak footing yesterday, despite the rebounds that occurred for other major currencies. The PBOC announced an interest rate cut in order to keep the economy afloat, but this did very little to boost sentiment for the commodity currencies. In New Zealand, the trade deficit came in at 649 million NZD, wider than the previous 194 million NZD shortfall, signaling a decline in exports. US crude oil inventories are due today and a large oversupply could drive prices lower.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 27, 2015)

USD

The US dollar managed to regain a lot of lost ground in yesterday’s trading sessions when risk aversion extended its stay in the markets. In addition, data from the US was stronger than expected, with the headline durable goods orders showing a 2.0% jump and the core figure indicating a 0.6% gain. US preliminary GDP, initial jobless claims, and pending home sales reports are lined up for today and another batch of strong figures could renew dollar demand. The Jackson Hole Symposium is also set to start today but Yellen’s absence has dampened expectations for a Fed announcement.

EUR

The euro gave back its recent wins to its rivals, despite the lack of any reports from the euro zone yesterday. Traders seem to be reverting to the lower-yielding dollar and Japanese yen, dumping their riskier euro holdings in the process. There are still no major reports due from the euro zone today, which suggests that market sentiment could continue to play a role in euro price action.

GBP

The pound suffered a sharp selloff against its forex peers in yesterday’s sessions, even though there wasn’t any major catalyst for the drop. Analysts say that this was spurred by Cable’s inability to break past key resistance levels, forcing traders to liquidate their pound positions instead. Only the Nationwide HPI report is due from the UK today, leaving traders to hold out for the top-tier UK second GDP estimate and quarterly business investment report due tomorrow.

CHF

The franc followed in the euro’s footsteps and weakened against its forex counterparts, even though the Swiss UBS consumption indicator showed a climb from 1.61 to 1.64. There are no reports due from Switzerland today.

JPY

After a bit of consolidation and profit-taking, the yen resumed its rally against its counterparts in yesterday’s trading session. The Nikkei managed to chalk up a decent win for the day, although risk appetite generally remained weak. There have been no reports out of Japan yesterday and none are due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still in a weak spot yesterday, but some managed to score wins against the European currencies. Oil saw a slight rebound, thanks to the drop in US crude oil inventories. Earlier today, Australia reported a 4.0% drop in private capital expenditure and a downgrade in the previous report. No other reports are due from the comdoll economies today, leaving risk sentiment and commodity prices as the main drivers of price action.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 28, 2015)

USD

The US dollar managed to stage a strong rally in the US trading session after the Q2 GDP reading enjoyed a large upward revision from 2.3% to 3.7%. However, components of the report showed a significant buildup in inventories, which suggests weak demand and potentially slower business production in the next months. Core PCE price index, along with personal spending and income reports, are lined up for today.

EUR

The euro gave up its recent wins to the dollar and some of its major counterparts, despite the lack of top-tier data from the region. In Germany, import prices recorded a worse than expected 0.7% drop versus the projected 0.3% decline and the previous 0.5% drop. German and Spanish flash CPI readings are due today and 0.1% declines are eyed for both reports.

GBP

The pound continued its selloff in yesterday’s trading sessions, with no reports from the UK to provide any support. For today, the second GDP estimate for Q2 2015 is lined up and no changes to the initial 0.7% estimate is expected. Preliminary business investment data is also due and this might show a 1.6% gain. Stronger than expected data could allow the pound to recover.

CHF

The franc caved to dollar strength in recent trading sessions, spilling over to other Swissy pairs. Switzerland is set to print its Q2 GDP reading today and analysts are expecting to see a 0.1% contraction to follow the previous -0.2% growth figure. This would put the Swiss economy in recession, which might spur more losses for the franc.

JPY

The yen gave up some of its recent gains, mostly spurred by the sharp rally in USDJPY and the pickup in risk appetite. Earlier today, Japan showed mixed reports, with a weaker than expected household spending figure and stronger than expected core CPI readings in Tokyo and in the rest of the country. Retail sales was also better than expected at 1.6% versus the projected 1.1% increase.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made decent rebounds in yesterday’s trading sessions, spurred by the return in risk appetite. In Australia, private capital expenditure showed a 4.0% drop, worse than the projected 2.5% decline. There are no reports lined up from the comdoll economies today, leaving risk sentiment in control.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 31, 2015)

USD

The US dollar had a mixed performance on Friday, but managed to advance against some of its rivals. Data from the US was mostly weaker than expected, as the personal spending figure came in below consensus with a 0.3% gain versus the projected 0.4% increase while the personal income figure showed a 0.4% uptick as expected. The UoM consumer sentiment figure was downgraded from 92.9 to 91.9 versus the projected upgrade to 93.2. For today, only the Chicago PMI is lined up and no changes to the previous 54.7 figure is expected.

EUR

The euro gave back some of its recent wins, as data from the euro zone came in mixed. Germany showed a flat reading for its preliminary CPI while Spain posted a worse than expected 0.4% drop. For today, German retail sales and the flash headline and core CPI readings for the region are due.

GBP

The pound was in a weak spot on Friday, as the UK reports failed to provide strong support. The GDP reading was unchanged at 0.7% as expected while the quarterly preliminary business investment figure showed a stronger than expected 2.9% increase. There are no reports due from the UK economy today.

CHF

The franc enjoyed a bit of volatility on Friday due to the stronger than expected Swiss GDP of 0.2%, allowing the economy to dodge a recession. SNB head Thomas Jordan’s speech managed to erase some of the gains though, as he emphasized that they’re ready to intervene in the forex market if necessary.

JPY

The yen was able to chalk up some gains after seeing strong economic data but gave up ground on risk appetite. Retail sales showed a stronger than expected 1.6% jump versus the projected 1.1% increase while the jobless rate improved from 3.4% to 3.3%. The national core CPI stayed flat instead of showing the projected 0.2% decline. Earlier today, Japan reported a 0.6% decline in preliminary industrial production data for July.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was able to rake in some gains on Friday, thanks to the back-to-back gains in oil prices. Earlier today, New Zealand reported a drop in its ANZ business confidence index from -15.3 to -29.1 while Australia showed a 1.9% drop in company operating profits as expected. Canada’s current account balance is due later on and a smaller deficit is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Sept 1, 2015)

USD

The US dollar was able to hold on to its gains at the start of the week, as risk aversion seemed to return to the financial markets. Data from the US came in slightly weaker than expected, as the Chicago PMI dipped from 54.7 to 54.4 instead of holding steady. For today, the US ISM manufacturing PMI is due and it might show a dip from 52.7 to 52.6, reflecting a weaker pace of expansion. Traders will be more interested to see how the employment index fares to gauge if the August NFP might miss or surpass expectations.

EUR

The euro managed to hold on to its recent wins when data from the region came in mostly in line with expectations. The headline CPI estimate showed a 0.2% gain as expected while the core version of the report indicated a 1.0% increase. Final manufacturing PMI readings are lined up for today and upward revisions could allow the shared currency to gain further ground.

GBP

The pound was still in a weak spot, as UK traders were off on a bank holiday yesterday. Today has the UK manufacturing PMI on tap and no change is expected from the previous 51.9 reading. A drop could mean more pound weakness while a climb could spur gains.

CHF

The franc enjoyed a few gains in recent trading sessions, thanks to the stronger than expected KOF economic barometer reading. The figure climbed from an upgraded 100.4 reading to 100.7, reflecting stronger improvements in the economy. The Swiss manufacturing PMI is due today and a climb from 48.7 to 49.9 is expected.

JPY

The yen managed to hold on to its recent gains as risk aversion returned to the financial markets. Data from Japan was weaker than expected, with the preliminary industrial production report showing a 0.6% drop instead of the projected 0.1% uptick. Earlier today, Japan reported a 5.6% gain in quarterly capital spending versus the projected 9.0% increase.

Commodity Currencies (AUD, NZD, CAD)

The comdolls lost a bit of ground due to China’s weak PMI readings, both from the government and Markit. The RBA decided to keep rates on hold at 2.00% as expected and confirmed that the Aussie is already adjusting to lower commodity prices. The Canadian monthly GDP reading is due today and a 0.2% expansion is eyed for June. Also lined up is the global dairy trade auction in New Zealand.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Sept 2, 2015)

USD

The US dollar managed to advance against most of its forex counterparts, despite weaker than expected data from the US economy. The ISM manufacturing PMI fell from 52.7 to 51.1, worse than the estimated dip to 52.6. The employment component recorded a drop of 1.5, reflecting weaker conditions and a potential downside surprise in the NFP. For today, the ADP non-farm employment change report is due and it might show a 204K increase in hiring, stronger than the previous 185K gain.

EUR

The euro was able to hold on to its recent gains, thanks to stronger than expected data from Germany and Italy. The euro zone’s largest economy showed a 7K increase in employment while Italy reported improvements in its monthly and quarterly jobless rates. The Spanish unemployment change report is due today and it might show a 35.3K increase in joblessness, following the previous 74K reduction.

GBP

The pound gave up ground in recent trading sessions due to weaker than expected UK manufacturing PMI. The index slumped from 51.9 to 51.5 instead of holding steady, reflecting a downturn in industry activity. For today, the construction PMI is due and it might show a climb from 57.1 to 57.6, with stronger than expected results likely to spur a pound recovery.

CHF

The franc regained some ground in yesterday’s sessions, as the Swiss manufacturing PMI landed back above 50.0. The index improved from 48.7 to 52.2, higher than the projected 49.9 figure, indicating a strong expansion in the industry. No reports are due from Switzerland today.

JPY

The yen continued to stay strong against its rivals, particularly the commodity currencies, as risk appetite remained weak in recent trading sessions. Chinese equities recorded more declines, confirming that the slowdown isn’t over yet. Data from Japan was weaker than expected, with capital spending rising by only 5.6% in the previous quarter versus the projected 9.0% gain. No reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls resumed their selloff even though New Zealand and Canada reported positive data. The Canadian economy expanded by 0.5% in June, stronger than the projected 0.2% growth, while the Global Dairy Trade auction indicated a 10.9% gain in prices. Weak PMI readings from China may be to blame for the recent drop in risk appetite, as the RBA also sounded somewhat positive with their statement yesterday.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Sept 3, 2015)

USD

The US dollar had a mixed trading day, as data from the economy fell short of expectations. The ADP non-farm employment change report showed a mere 190K gain in hiring versus the projected 224K increase while the previous reading was downgraded from 185K to 177K, suggesting a downside surprise for tomorrow’s NFP release. Revised non-farm productivity and unit labor costs were also weaker than expected. Factory orders posted a 0.4% uptick, half of the projected 0.8% increase. For today, the ISM non-manufacturing PMI is due and it might show a drop from 60.3 to 58.3.

EUR

The euro paused from its recent rallies against its forex rivals, despite stronger than expected jobs data from Spain. The economy reported a 21.7K increase in joblessness, lower than the estimated 35.3K gain. Final services PMI readings are due from the euro zone today ahead of the ECB rate decision later on. No actual policy changes are expected but Draghi’s remarks on inflation might be crucial to euro price action.

GBP

The pound was still in a weak spot in recent trading sessions, as the UK construction PMI came in slightly lower than expected. The index climbed from 57.1 to 57.3, lower than the estimated 57.6 figure. For today, the services PMI is due and this could have a stronger impact on pound movement. The index is expected to rise from 57.4 to 57.6, which might allow the UK currency to recover.

CHF

The franc gave up more ground to the dollar, despite the lack of data from Switzerland. There are still no reports due from the Swiss economy today, leaving the franc sensitive to counter currency moves or euro zone data.

JPY

The yen held on to its recent wins when risk aversion extended its stay in the markets. There have been no reports released from Japan yesterday and none are due today, leaving risk sentiment the main driver of yen price action

Commodity Currencies (AUD, NZD, CAD)

Comdolls have been looking mostly weaker, even though the Loonie drew some support from the reduction in US crude oil inventories and speculations that the OPEC is ready to discuss production levels. Earlier today, Australia reported a 0.1% decline in retail sales instead of the projected 0.4% increase and a smaller than expected trade deficit of 2.46 billion AUD. Canada’s trade balance is up for release later on and a wider deficit is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Sept 4, 2015)

USD

The US dollar was able to take advantage of the run in risk aversion, thanks to the ECB's dovish monetary policy statement. Data from the US was also better than expected, as the ISM non-manufacturing PMI dipped from 60.3 to 59.0, better than the projected drop to 58.3. For today, the NFP could prove to be a huge catalyst, as analysts are expecting to see only 215K in hiring gains. Leading employment indicators are mostly suggesting a downside surprise, which might force the dollar to retreat. The jobless rate is expected to fall from 5.3% to 5.2% while average hourly earnings could pick up by 0.2%.

EUR

The euro suffered a sharp selloff when the ECB announced that it is open to further easing. It even downgraded growth and inflation forecasts, underscoring its willingness to act if commodity prices continue to fall. There are no major reports out of the euro zone today, leaving traders to adjust their positions to take the ECB's dovish stance into account.

GBP

The pound also suffered a decline yesterday when the UK services PMI turned out to be a disappointment. The index fell from 57.4 to 55.6, reflecting a downturn in industry activity. This followed the bleak construction and manufacturing PMI readings from earlier on in the week, increasing the odds of hearing a dovish outlook from the BOE as well. There are no reports due from the UK today.

CHF

The franc took its cue from the euro and lost ground to its rivals, as traders predicted that the SNB might ramp up its intervention efforts if the ECB eases monetary policy. There have been no reports out of Switzerland yesterday while today has the CPI on tap. This could show a 0.2% decline in price levels for August, following the previous 0.6% slide.

JPY

The yen was able to rally when risk aversion kicked in after the ECB statement. There have been no major reports out of Japan, putting the yen in a weak spot earlier in the day due to the absence of Chinese traders. However, the low-yielding currency enjoyed safe-haven flows when the ECB shared a downbeat economic view. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were in a good mood earlier in the day, as the absence of Chinese traders kept risk-off moves in check. However, data from Australia came in mixed, as the retail sales report showed a 0.1% drop while the trade balance indicated a smaller deficit. Crude oil inventories showed 4.7 million barrels in stockpiles but this did little to push oil prices lower, as revisions to US data showed that they were producing fewer barrels than initially reported. Canada is set to print its jobs numbers today and might show a 4.8K decrease in hiring.

By Kate Curtis from Trader's Way