Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Aug 12, 2016)

USD

The US dollar had a mixed performance, as it advanced to the European currencies and yen but gave up ground to the Canadian dollar. Medium-tier US data beat expectations, as the initial jobless claims came in at 266K versus the 272K forecast while import prices rose 0.1% instead of printing the projected 0.2% drop. US retail sales are up for release today, with analysts expecting to see a 0.4% increase in the headline figure and a 0.2% uptick for the core figure. PPI and preliminary UoM consumer sentiment data are also lined up.

EUR

The euro was unable to hold on to most of its recent gains since there were no major reports from the euro zone. Today has the preliminary GDP readings from its top economies such as Germany and Italy, as well as the GDP reading for the entire region. The German economy is expected to have grown by 0.3% in Q2 while the euro zone could chalk up the same GDP figure.

GBP

The pound was still one of the weaker performers for the day, as there were no reports out of the UK economy to give it a boost. Only the UK construction output figure is lined up for today and a 0.9% rebound is expected to follow the previous 2.1% slide.

CHF

The franc returned some of its recent wins as risk appetite seemed to improve earlier in the day. There were no reports out of Switzerland then and none are due today, which suggests that sentiment could stay the bigger driver of price action.

JPY

The yen struggled to hold on to its recent gains, particularly to the US dollar, as Japanese banks were closed on a holiday yesterday. There are no reports due from Japan today but it seems as though the downbeat data from China might have revived risk aversion in the Asian markets.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance, as the Loonie was able to benefit from crude oil gains while the Aussie and Kiwi slid lower. The Kiwi barely drew support from upbeat quarterly retail sales data as traders are focused on what the RBNZ might do next in terms of driving the currency down. As for the Aussie, downbeat industrial production, retail sales, and fixed asset investment figures from China could likely weigh on Australia's export activity later on.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 15, 2016)

USD

The US dollar sold off briefly against its counterparts on Friday when the retail sales report missed expectations. Headline consumer spending was flat while the core version of the report showed a 0.3% drop. PPI readings were also below consensus, with a 0.4% drop in the headline figure and a 0.3% decline for the core reading. The preliminary consumer sentiment index was also lower than expected at 90.4, hinting at weaker consumer spending later on. Only the Empire State manufacturing index is due today and a rise from 0.6 to 2.1 is expected.

EUR

The euro took advantage of dollar weakness on Friday but was off to a weak start this week, even though most banks in the region are closed for the holiday. Germany's preliminary GDP beat expectations with 0.4% growth while Italy's flash GDP was weaker than expected with its flat reading. The region's growth figure stood at 0.3% as expected.

GBP

The pound was the weakest of the bunch, as traders likely positioned ahead of this week's top-tier UK releases. Construction input was also weaker than expected with a 0.9% decline while the Rightmove HPI showed a 1.2% fall in house prices. No other reports are due from the UK today but there could be some pricing in ahead of the CPI data due tomorrow.

CHF

The franc was barely able to hold on to its recent gains to the dollar as there were no reports to give the Swiss currency a boost on Friday. Today has the PPI on tap and a 0.2% drop in producer prices is eyed, likely to weigh on overall inflation down the line.

JPY

The yen slid lower to start the week after Japan's preliminary GDP reading came in flat for Q2 versus the projected 0.2% expansion. On a less downbeat note, the previous reading was upgraded to 0.5% while the price index beat expectations at 0.8%.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance, as the Aussie and Kiwi lagged while the Loonie held on to its gains. Expectations of a production cut in the upcoming OPEC informal meeting are supporting crude oil prices and the positively correlated Canadian currency for now while Australia and New Zealand might be facing weaker demand for commodity products due to weaker than expected demand from China. Industrial production, retail sales, and fixed asset investment all declined and missed expectations last week.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 16, 2016)

USD

The US dollar was mostly weaker in recent trading, only advancing against the British pound and Japanese yen. Data from the US economy was weaker than expected as the Empire State manufacturing index showed a surprise drop to industry contraction. US CPI, along with building permits and housing starts, are up for release today. Weaker inflation readings are eyed, following the disappointing PPI readings last Friday. Also lined up are the industrial production and capacity utilization data.

EUR

The euro took advantage of dollar weakness but was no match to comdoll strength. French and Italian banks were closed for the holiday so liquidity was lower for euro pairs yesterday. The German ZEW economic sentiment index is due today and a rise from -6.8 to +2.1 is expected, which would reflect a return to optimism. Meanwhile, the region's ZEW index is slated to improve from -14.7 to -6.3.

GBP

The pound was still the weakest performer for the day as traders started pricing in expectations for the top-tier UK reports this week. The UK CPI is up for release today and no change in the 0.5% headline figure is eyed. The core reading is expected to dip from 1.4% to 1.3% with weaker than expected results likely to drive the UK currency lower.

CHF

The franc raked in more gains against its forex counterparts as Swiss PPI beat expectations. The report showed a 0.1% dip in producer prices versus the projected 0.2% decline. There are no reports due from the Swiss economy today so risk sentiment might have a bigger impact.

JPY

The yen held its ground despite seeing downbeat GDP data from Japan, as the lower-yielding currency was also supported by risk aversion in the Asian session. The economy posted a flat GDP reading for Q2 instead of the projected 0.2% expansion. There are no reports due from the Japanese economy today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to rally due to gains in gold and crude oil, but the event risks could turn things around. The RBA minutes are due today and indications of further rate cuts could mean losses for the Australian currency while New Zealand has its GDT auction, jobs data, and PPI readings lined up. Another strong gain in dairy prices, coupled with stronger than expected quarterly employment and producer prices gains, could lift the Kiwi while downbeat readings could spur rate cut expectations. Canada's manufacturing sales data is also due but the currency could take its cue from crude oil.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 17, 2016)

USD

The US dollar was off to a weak start but soon made a rebound against most of its peers. Talk of potential rate hikes from Fed officials renewed dollar strength as traders are setting up for the release of the FOMC meeting minutes later today. US data came in mixed, with the headline CPI staying flat as expected and the core CPI coming short of expectations with a 0.1% uptick versus the projected 0.2% gain. Housing starts, industrial production, and capacity utilization beat expectations.

EUR

The euro took advantage of dollar weakness in earlier trading sessions then consolidated afterwards. Data from the euro zone was mixed, as the German ZEW index rose from -6.8 to +0.5, short of the estimated +2.1 figure, while the region's ZEW was up from -14.7 to +4.6 versus the projected -6.3 reading. There are no reports due from the euro zone today.

GBP

The pound was a big winner for the day, thanks to stronger than expected UK CPI data. The headline reading rose from 0.5% to 0.6% while the core CPI was unchanged at 1.3% as expected. Meanwhile, underlying and leading inflation reports such as the producer price index, HPI, and RPI beat expectations also. UK jobs data is due today, with the July claimant count slated to show a 5.2K rise in joblessness and the June jobless rate to stay unchanged at 4.9%. The average earnings index is expected to rise from 2.3% to 2.5% to reflect stronger wage pressures.

CHF

The franc was also able to take advantage of dollar weakness and hold on to some of its wins. There were no reports out of the Swiss economy yesterday while today has the ZEW economic expectations index. Any improvement from the earlier 5.9 reading could be bullish for the franc.

JPY

The yen chalked up strong gains to the dollar and held its ground against most of its peers, except the pound. There were no reports out of the Japanese economy yesterday and none are lined up today so risk sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi posted some gains for the day but the Loonie was still the biggest winner in the bunch, thanks to another pickup in crude oil prices. In New Zealand, the GDT auction yielded an impressive 12.7% gain in dairy prices and traders are still waiting on the quarterly jobs readings. Australia has its MI leading index and quarterly wage price index due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 18, 2016)

USD

The US dollar gave up some of its recent gains when the FOMC minutes showed that the central bank is in no rush to hike interest rates. Most policymakers judged that it would be prudent to accumulate more data before tightening. Ahead of this, Fed member Bullard said that he prefers to see evidence of stronger growth before voting to adjust policy and that he only sees one hike over the next two years. US initial jobless claims and Philly Fed index are due today.

EUR

The euro took advantage of dollar weakness but was unable to gain much ground against its other counterparts. There were no economic reports from the euro zone yesterday while today has the current account balance and final CPI readings due.

GBP

The pound had a volatile time when it saw mixed results from the UK jobs release. July claimant count dropped by 8.6K versus the projected 5.2K rise while the unemployment rate was unchanged at 4.9% as expected. The average earnings index rose from 2.3% to 2.4%, short of the estimated 2.5% figure.

CHF

The franc also took advantage of dollar weakness but was unable to rally much further since its ZEW economic expectations index fell from 5.9 to -2.8 to reflect pessimism. There are no reports from the Swiss economy today.

JPY

The yen regained ground to the dollar and some of its forex counterparts despite the lack of top-tier data from Japan yesterday. Japan's trade balance is up for release today and a smaller surplus of 0.14T JPY is eyed from the earlier 0.33T JPY surplus.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of the post-FOMC minutes dollar weakness but the rallies were limited. Crude oil recovered on a draw of 2.5 million barrels in US inventories after a slump when Saudi signaled that it can raise production to record levels. Australian jobs data is due next and a 10.2K rise in hiring is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 19, 2016)

USD

The US dollar was still mostly weaker against its peers and hawkish remarks from Fed officials weren't enough to spur gains. Reports such as initial jobless claims and Philly Fed index were also better than expected but forex traders still seem to be factoring in the implications of the July FOMC meeting minutes on rate hike odds. There are no reports due from the US economy today.

EUR

The euro was able to take advantage of dollar weakness and recover against the commodity currencies. Final CPI readings were in line with expectations while the ECB meeting minutes were not as dovish as many expected. There are no reports due from the euro zone today.

GBP

The pound was able to enjoy another leg higher when the UK retail sales report beat expectations. Analysts were only expecting to see a 0.1% uptick but the report printed a 1.4% jump, suggesting that consumer spending didn't take such a huge hit after the EU referendum. UK public sector net borrowing data is due today.

CHF

The franc continued to advance to the dollar and the European currencies even though there were no major reports out of the Swiss economy yesterday. There are still no reports due today so market sentiment could be the main price driver.

JPY

The yen held on to its recent gains as risk-taking appeared to fade in recent sessions. Japan's trade balance also beat expectations with a 0.32T JPY surplus versus the projected 0.14T JPY figure. For today, the all industries activity index is due.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were mostly weaker for the day even though Australia printed an upbeat jobs report. The economy added 26.2K jobs in July, higher than the projected 10.2K reading, while the June reading enjoyed an upgrade from 7.9K to 10.8K. Canada's CPI and retail sales figures are lined up for today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 22, 2016)

USD

The US dollar was able to regain ground against its peers on Friday, despite the lack of top-tier data from the US economy. Risk aversion appears to have supported the safe-haven currency as reports of the Brexit process being triggered in April next year and downbeat data from Canada reminded traders that the US economy is still one of the more stable ones. There are no major reports due from the US today.

EUR

The euro gave up a bit of ground to the dollar but managed to hold on to some of its wins against the commodity currencies. German PPI came in better than expected on Friday with a 0.2% uptick versus the projected 0.1% rise. There are no reports due from the euro zone today.

GBP

The pound suffered a sharp selloff when UK PM Theresa May suggested that Article 50 could be invoked by April next year, which would mean that the Brexit process would start by then. Data from the UK economy was weaker than expected as public sector net borrowing printed a 1.5 billion GBP deficit. There are no reports due from the UK today.

CHF

The franc returned some of its recent wins to the dollar as there were no major reports to boost the Swiss currency on Friday. There are still no reports lined up from Switzerland today so market sentiment could be the driver of price action.

JPY

The yen gapped down against its forex counterparts over the weekend after BOJ Governor Kuroda hinted that they could lower negative interest rates further. These gaps appear to have gotten closed already but traders could be reluctant to buy the yen in anticipation of additional BOJ easing.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was still one of the worst performers for the day as potential rating downgrades and a slowdown in China's property prices weighed on Australia's outlook. Data from Canada came in weaker than expected as core CPI was flat while headline CPI fell 0.2%. Headline retail sales dropped 0.1% while core retail sales sank 0.8%. Canada's wholesale sales report is due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 23, 2016)

USD

The US dollar had a mixed performance as there were no major reports on deck. Today has the new home sales report and the Richmond manufacturing index on tap, although traders might be less sensitive to data as they stay on the lookout for more clues on how Yellen's Jackson Hole testimony might turn out.

EUR

The euro advanced against most of its counterparts even though there were no major releases. Traders must be positioning ahead of today's PMI reports, which are slated to show improvements in the manufacturing and services sectors of France and Germany. Stronger than expected data could reassure market watchers that the region was able to hold its ground even after the Brexit vote.

GBP

The pound recovered from Friday's slump as UK PM May has yet to confirm whether or not they would trigger Article 50 earlier than initially stated. There were no reports out of the UK economy yesterday while today has the CBI industrial order expectations report on tap.

CHF

The franc tossed and turned without establishing much direction since there were no major market reports released. There are still no reports due from the Swiss economy today but the franc could take its cue from the euro zone reports.

JPY

The yen filled the weekend gaps quickly as traders didn't get much follow-through from Kuroda's dovish remarks over the weekend. There were no reports out of Japan yesterday while today has the flash manufacturing PMI on tap and another testimony by Kuroda.

Commodity Currencies (AUD, NZD, CAD)

The Loonie gave up a lot of ground as crude oil prices settled lower on the expiration of September contracts. Meanwhile, the Kiwi enjoyed a boost after RBNZ head Wheeler said that rapid rate cuts could do more harm than good. In Australia, the CB leading index posted a meager 0.1% uptick. New Zealand's trade balance is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 24, 2016)

USD

The US dollar was mostly stronger in recent trading, except against the British pound. Data from the US was weaker than expected, as the flash manufacturing PMI fell from 52.9 to 52.9 while the Richmond manufacturing index dropped from +10 to -11. New home sales printed a higher than expected 654K figure for July but the previous reading was downgraded. US existing home sales and crude oil inventories are due today.

EUR

The euro slumped across the board when flash manufacturing and services PMIs from Germany and France mostly fell short of estimates. French flash manufacturing PMI fell from 48.6 to 48.5 but services PMI was up from 50.5 to 52.0. German flash manufacturing PMI fell from 53.8 to 53.6 while services PMI dropped from 54.4 to 53.3. Germany's final GDP reading is due today and a downgrade from 0.4% to 0.3% is eyed.

GBP

The pound continued to climb against its peers, boosted by slightly stronger than expected data and no confirmation from the UK government on whether they'll invoke Article 50 earlier than expected or not. The CBI industrial order expectations index dipped from -4 to -5, better than the projected fall to -9 but still indicative of a faster pace of contraction. BBA mortgage approvals data is due today and a decline from 40.1K to 38.5 is eyed.

CHF

The franc lost ground to the dollar and the pound but was able to take advantage of euro weakness. There were no reports out of the Swiss economy yesterday and none are due today so the franc could keep reacting to currency-specific events.

JPY

The yen advanced to the comdolls but weakened to the dollar and pound. Japan's flash manufacturing PMI rose from 49.3 to 49.6, better than the projected 49.5 figure. There are no major reports due from Japan today so risk sentiment could be the primary driver of yen price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls resumed their slide as data came in below expectations. New Zealand reported a wider than expected trade deficit due to weaker imports and exports while Australia printed a 3.7% slump in quarterly construction work done versus the projected 1.9% drop. A draw of 0.5 million barrels in US crude oil inventories is expected, which might give the Loonie a boost.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Aug 25, 2016)

USD

The US dollar advanced against most of its forex peers despite downbeat housing data, as traders seem to be reacting to market sentiment. US equities closed lower for the day, weighed by declines in the drugmaker industry. US durable goods orders, flash services PMI, and initial jobless claims are lined up today. Headline durable goods orders could rebound by 3.4% while core durable goods orders could be up by 0.4%.

EUR

The euro slid lower across the board despite stronger than expected German final GDP. The earthquake in Central Italy has weighed heavily on sentiment in the region, causing traders to shrug off the data. For today, the German Ifo business climate index is due and a rise from 108.3 to 108.5 is expected.

GBP

The pound carried on with unwinding its post-Brexit losses as traders adjusted their biases after last week's upbeat set of U.K. data. BBA mortgage approvals were actually weaker than expected at 37.7K. For today, the CBI realized sales index is due and a rise from -14 to -5 is eyed.

CHF

The franc gave up more ground to the dollar and pound, as there were no reports to give the Swiss currency a boost. There are still no reports due from Switzerland today so the franc could simply act as a counter currency.

JPY

The yen took advantage of the risk-off vibes but gave up ground to the dollar and pound. There were no reports out of Japan yesterday and none are due today so risk sentiment could still be the main driver of price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls slid lower on weaker commodity prices and a slowdown in risk-taking. Data from Australia was weaker than expected with a 3.7% slump in construction work done for Q2. US crude oil inventories rose by 2.5 million barrels versus the projected draw of 0.5 million barrels. Fonterra upgraded milk price forecasts for this year and the next, keeping the Kiwi supported. There are no reports due from the comdoll economies today.

By Kate Curtis from Trader's Way