Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Apr 24, 2017)

USD

The US dollar was off to a weak start for the week as risk appetite returned on the outcome of the French elections. Besides, data from the US was mostly weaker than expected on Friday as both flash manufacturing and services PMI printed weaker than expected results. For today, more speeches from dovish FOMC member Kashkhari are lined up.

EUR

The euro popped higher against its peers over the weekend as the first round of French elections left Macron and Le Pen going head to head in the next round in May. This could mean stronger odds of Macron beating Le Pen, thereby reducing odds of a Frexit. Flash manufacturing and services PMI from Germany and France turned out mixed on Friday while the German Ifo business climate index is due today.

GBP

The pound took its lead from the euro and also rallied on the results of the French elections. Apart from that, the UK currency is also riding on the bullish wave after the UK snap elections were announced. Only the Rightmove HPI and CBI industrial order expectations index are due today and strong readings could keep the currency afloat.

CHF

The franc was also able to advance against most of its major counterparts when the French election results were announced but it was no match to pound and euro strength. There were no reports out of the Swiss economy on Friday and none are due today so the currency could keep reacting to country-specific events.

JPY

The Japanese yen gave up a lot of ground over the weekend as risk appetite was off to a strong start this week. Data from Japan came in line with expectations on Friday and none are due today so the currency is extra sensitive to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls edged higher to the lower-yielding currencies but were left behind by the euro and pound. Canadian inflation reports came in mostly in line with expectations, except for the headline reading which posted a 0.2% uptick versus the projected 0.4% rise. New Zealand and Australia have bank holidays today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Apr 25, 2017)

USD

The US dollar regained ground on a strong equity market performance on expectations for Trump's tax reform announcement on Wednesday. There were no major reports out of the US and markets seemed to shrug off cautious remarks from FOMC dissenter Kashkari. For today, US CB consumer confidence and new home sales data are due, along with the Richmond manufacturing index.

EUR

The euro had a strong start for the week but gave up some of its gains and filled some gaps throughout the sessions that followed. German Ifo business climate data was better than expected as the reading rose from 112.4 to 112.9. Traders now seem to be turning their attention to the upcoming ECB statement, which could show that the central bank is reverting to its dovish stance. There are no reports due today.

GBP

The pound also stalled from its climb as CBI industrial order expectations data disappointed. The index fell from 8 to 4 to reflect weaker growth instead of improving to the estimated reading at 9. UK public sector net borrowing data is up for release next and a larger deficit of 2.6 billion GBP is eyed.

CHF

The franc failed to establish a clear direction in trading as it mostly reacted to currency-specific events. There are still no reports due from the Swiss economy today so the franc could be sensitive to market sentiment again.

JPY

The yen regained some ground after gapping down against its peers over the weekend as risk aversion returned to the markets. There were no major reports out of Japan and none are due today so market sentiment could still be the main driving factor.

Commodity Currencies (AUD, NZD, CAD)

The comdolls resumed their weak stance when risk aversion returned to the markets. Canadian wholesale sales was weaker than expected with a 0.2% drop versus the projected 2.1% gain. There are no reports due from the comdoll economies today..

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Apr 26, 2017)

USD

The US dollar regained a bit of ground against its peers despite mixed reports from the US. Housing figures were generally better than expected but the Richmond manufacturing index dipped while CB consumer confidence also turned lower. Traders are now turning their focus to Trump's upcoming tax reform announcement and this might cause volatility for the dollar as there are no other major catalysts on deck.

EUR

The euro resumed its climb as more polls indicated a widening lead for Macron versus Le Pen, thereby reducing odds of a Frexit. Medium-tier data from the euro zone also turned out mostly stronger than expected while a report from Reuters suggested that the ECB might remove references to downside risks in their upcoming policy statement. There are no major reports due from the euro zone today.

GBP

The pound also squeezed out some gains against most of its rivals, despite a larger than expected public deficit. The net borrowing figure came in at 4.4 billion GBP, higher than the projected reading at 2.1 billion GBP. There are no reports lined up from the UK economy for today.

CHF

The franc had a mixed performance as the lack of data from Switzerland left it reacting mostly to currency-specific events. Swiss UBS consumption indicator and Credit Suisse economic expectations data are up for release next.

JPY

The yen lost a lot of ground to its peers as risk appetite returned and weekend gaps were left unfilled. Japan is set to print its all industries activity index next and might show a 0.8% uptick, higher than the earlier 0.1% increase, but traders are likely to put more focus on market sentiment and bond yields with the Trump tax announcement coming up.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance as they weakened to the dollar and European currencies but advanced to the yen. Trump talked tough on the Canadian lumber and dairy industry, weighing on the Loonie despite the pickup in crude oil. Australia's quarterly CPI is due next and a 0.6% uptick is eyed while Canada is scheduled to print its retail sales figures next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Apr 27, 2017)

USD

The dollar had a volatile run during the release of the Trump administration's tax reform plan but ended the day mostly unchanged. Up ahead, US initial jobless claims, durable goods orders, and pending home sales data are due next, although traders could hold out for the advanced GDP release on Friday.

EUR

The euro continued to advance against its peers on strengthening expectations that Macron could win the French presidency. There were no reports released from the euro zone yesterday while today has the German preliminary CPI and GfK consumer climate index. Traders are expecting to see a 0.1% dip in German price levels and an improvement in the index from 9.8 to 9.9. The ECB statement is also coming up and less dovish remarks could extend the euro's gains.

GBP

The pound also extended its gains against its rivals despite the lack of top-tier data from the UK. Only the CBI realized sales index is due today and a dip from 9 to 6 is eyed, but a stronger than expected result could assure traders of the resilience of the UK economy.

CHF

The franc had a mixed performance as it weakened to its European counterparts but strengthened against the rest of its peers. Data from Switzerland was mixed as the Swiss UBS consumption indicator improved from 1.45 to 1.50 while the Credit Suisse Economic Expectations index fell from 29.6 to 22.2. Swiss trade balance is due next and a smaller surplus of 3.01 billion CHF is expected.

JPY

The yen tossed and turned but ultimately recovered some of its losses after US bond yields failed to surge on the tax reform announcement. Earlier today, the BOJ refrained from making any adjustments in its monetary policy and interest rates as expected. BOJ Governor Kuroda's press conference is still coming up.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were among the weakest performers, particularly the Loonie which was hit by mixed Canadian retail sales and warnings of a property bubble from the CHMC. Australia's quarterly CPI also came in a notch below expectations at 0.6%. On a less downbeat note, crude oil inventories posted a larger than expected draw of 3.6 million barrels.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Apr 28, 2017)

USD

The dollar had a mixed performance as it mostly reacted to currency-specific events. It weakened to the pound and yen but advanced against the euro and comdolls. Durable goods orders figures came in below expectations, and so did pending home sales and the initial jobless claims. For today, the advanced GDP report is due and a slower growth figure of 1.3% is eyed compared to the previous period's 2.1% gain. Chicago PMI and speeches by FOMC members Brainard and Harker are also lined up.

EUR

The euro advanced during the ECB statement as policymakers acknowledged that recent data is reflecting strong and continued growth. However, the shared currency retreated after Draghi admitted that underlying inflationary pressures remain subdued. He also said that interest rates could remain at current low levels even after QE ends and that they haven't decided on their options in June. French and Spanish flash GDP data are due, along with French consumer spending and German retail sales figures.

GBP

The pound held on to its recent gains and went for more as the CBI realized sales figure jumped from 9 to 38 instead of falling to 6. This medium-tier leading indicator reflects the resilience of the UK economy even with Brexit uncertainties, shoring up demand for the pound. UK preliminary GDP is due today and a 0.4% expansion is eyed, slightly lower than the earlier 0.6% growth figure.

CHF

The franc was mostly stronger, except against the British pound. Swiss trade balance came in stronger than expected at a surplus of 3.10 billion CHF compared to the expected 3.01 billion CHF surplus but smaller than the earlier 3.12 billion CHF figure. The Swiss KOF economic barometer is due today and an uptick from 107.6 to 107.7 is eyed. SNB head Jordan also has a speech lined up.

JPY

The yen regained ground as pairs tested technical levels for the week. Economic data from Japan turned out mixed, with household spending and preliminary industrial production falling short of estimates and retail sales printing strong results. Inflation reports were mostly in line with estimates.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were generally weaker as risk aversion was in play and there were no major reports to give them a boost. New Zealand's ANZ business confidence index dipped from 13 to 11 while Australia's quarterly PPI was stronger than expected at 0.5% versus 0.3%. Canada's monthly GDP is due today and a 0.1% uptick in growth is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 01, 2017)

USD

The US dollar was mostly stronger against its rivals on Friday even after the US advanced GDP reading turned out weaker than expected. The economy grew by 0.7% in Q1, lower than the projected 1.3% reading and the earlier 2.1% growth figure. However, underlying data such as the GDP price index and employment cost index turned out stronger than expected while the Chicago PMI also beat expectations. Core PCE price index and ISM manufacturing PMI, along with personal income and spending data, are due today but traders could pay more attention to Treasury Secretary Mnuchin's speech.

EUR

The euro held on to most of its recent gains as flash CPI readings from the region churned out upbeat results. The headline estimate rose from 1.5% to 1.9%, outpacing the 1.8% consensus, while the core reading climbed from an upgraded 0.3% reading to 0.8%. Medium-tier data from Germany and France fell short of estimates but Spain's flash GDP reading was stronger than expected at 0.8%. Euro zone banks are closed for the Labor Day holiday today.

GBP

The pound was also able to stay afloat even after reports confirming that EU leaders agreed to take a tough stance on Brexit. UK preliminary GDP also came short of consensus with a 0.3% growth figure versus the projected 0.4% expansion. UK banks are also closed for the holiday today.

CHF

The franc was mostly weaker against its European counterparts but managed to advance on risk aversion. The Swiss KOF economic barometer reading fell from 107.2 to 106.0 instead of improving to the projected 107.7 reading. Swiss banks are closed for the holiday today but retail sales data is due and a 0.5% year-over-year uptick is eyed.

JPY

The yen regained some ground against its counterparts as Japanese data turned out mostly stronger than expected on Friday. Inflation reports were in line with estimates while retail sales and the jobless rate turned out better than expected. Household spending and preliminary industrial production fell short. There are no major reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was off to a weak start as Chinese PMI readings printed over the weekend were below expectations. The manufacturing PMI dipped from 51.8 to 51.2 versus the projected fall to 51.7, reflecting a much slower pace of industry expansion than expected, while the non-manufacturing reading dropped from 55.1 to 54.0. In Canada, the monthly GDP reading showed a flat figure instead of the projected 0.1% uptick. No other top-tier reports are lined up for today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 02, 2017)

USD

The US dollar was unable to establish a clear direction in recent trading as the latest batch of reports fell short of estimates. Personal income posted a meager 0.2% uptick versus the projected 0.4% gain while personal spending was flat instead of rising by the estimated 0.2% reading. The ISM manufacturing PMI also dropped from 57.2 to 54.8 versus the estimated 56.6 figure. For today, only the total vehicle sales report is due.

EUR

The euro gave back some of its recent gains to the commodity currencies but kept advancing to the yen. Most European banks were closed for the holiday yesterday so the move was attributed to risk-taking. For today, final manufacturing PMI readings from the top economies are due and upbeat results could drive the shared currency higher.

GBP

The pound also retreated to the comdolls but managed to hold on to its gains against the yen and dollar. UK banks were closed for the holiday yesterday so there were no major reports released while today has the manufacturing PMI on tap. Analysts are expecting to see a dip from 54.2 to 54.0 but a higher than expected read could still push the UK currency higher.

CHF

The franc also had a mixed performance as it reacted mostly to currency-specific events. Swiss retail sales turned out much stronger than expected with a 2.1% year-over-year gain versus the estimated 0.5% uptick and the earlier 0.2% increase. Swiss manufacturing PMI is due today and a dip from 58.6 to 58.2 is eyed.

JPY

The yen was a big loser in recent trading sessions as risk appetite picked up. There were no major reports from Japan recently and the BOJ minutes didn't contain much surprises. The BOJ core CPI is due next and a rise from 0.1% to 0.2% is expected.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi led the pack while the Loonie lagged on talks of higher oil production in Libya. However, the Aussie stalled from its climb when the Caixin manufacturing PMI dropped from 51.2 to 50.3 instead of improving to the estimated 51.4 reading. The RBA decision is due next and no changes to monetary policy is eyed while the quarterly jobs report from New Zealand is lined up for the late US session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 03, 2017)

USD

The US dollar chalked up a mixed performance on the lack of top-tier data from the US. Total vehicle sales was weaker than expected while reports released earlier in the week signaled a slowdown in the consumer sector. ADP non-farm employment change and ISM non-manufacturing PMI are lined up today, but the FOMC statement could lead to stronger movement for the dollar. No actual policy changes are expected but a change in their bias could influence dollar trends.

EUR

The euro held on to its gains against the yen but caved to comdoll strength. Medium-tier reports were mostly in line with expectations, save for the region's unemployment rate which was unchanged at 9.5% instead of improving to the 9.4% consensus. Spanish and German unemployment change figures are lined up today, along with the region's flash GDP reading which could show a slightly faster pace of growth at 0.5%.

GBP

The pound was able to advance, thanks to stronger than expected UK manufacturing PMI. Analysts expected to see a fall from 54.2 to 54.0 but the actual reading surged to 57.3 to reflect a much stronger pace of industry growth. Construction PMI is due today and a dip from 52.2 to 52.1 is eyed, although this report doesn't normally trigger a large reaction from the pound.

CHF

The franc gave up some ground when the Swiss manufacturing PMI turned out weaker than expected. The reading fell from 58.6 to 57.4 versus the estimated drop to 58.2 to reflect a slower pace of industry expansion. There are no reports due from Switzerland today so the franc could take its cue from euro zone reports or market sentiment.

JPY

The yen continued to slide lower against most of its peers on risk appetite. Japanese banks are closed for the holiday so liquidity is down. Yen pairs could react to changes in US bond yields following the release of leading jobs indicators, namely the ADP report and ISM non-manufacturing PMI, and the FOMC statement.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi led the pack in terms of gains when the GDT auction and quarterly jobs report yielded strong results. Dairy prices rose 3.6% to mark its fourth consecutive gain while employment rose by 1.2% in Q1 versus the 0.8% consensus. Crude oil dipped below $47.50 per barrel on talks of ending the conflict in Libya and Saudi Arabia entertaining the idea of $45/barrel Brent crude oil.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 04, 2017)

USD

Dollar bulls were back in the game, thanks to strong leading jobs indicators and an upbeat FOMC statement. Fed officials shrugged off the Q1 GDP miss and assessed that growth could continue at a moderate pace and that inflation is likely to hit its 2% target in the medium-term. The ADP jobs figure came in at 177K versus 175K while the ISM non-manufacturing PMI rose from 55.2 to 57.5, higher than the 56.1 consensus. Initial jobless claims, trade balance, factory orders, and preliminary non-farm productivity and unit labor costs are lined up today.

EUR

The euro gave up some ground to the dollar but continued to advance against the comdolls and yen. German unemployment change was better than expected at -15K versus -10K while the region's flash GDP reading came in line with expectations of 0.5% growth. Spanish unemployment change and final services PMI readings are due today.

GBP

The pound was able to hold on to most of its recent gains after the construction PMI posted an upside surprise. Analysts expected the reading to dip from 52.2 to 52.1 but the actual figure landed at 53.1. The services PMI is due today and analysts are expecting to see a drop from 55.0 to 54.6 but an upside surprise might be in the cards.

CHF

The franc had another mixed performance as it weakened to the dollar and European currencies but advanced to the comdolls and yen. There were no reports out of the Swiss economy yesterday while the SECO consumer climate index is due today. A recovery from -3 to +3 is eyed, possibly lending more support to the Swiss currency.

JPY

The yen was the weakest performer of the bunch as risk-off traders favored the dollar again on rising bond yields and expectations of more Fed rate hikes. Japanese banks are still closed for the holiday so there are no reports due from Japan.

Commodity Currencies (AUD, NZD, CAD)

The comdolls slid to the dollar but managed to recover against the yen. Crude oil inventories fell by 0.9 million barrels versus the projected drop of 3.3 million barrels. Australia's trade balance was weaker than expected at a surplus of 3.11 billion AUD versus the projected 3.33 billion AUD reading and the earlier 3.66 billion AUD surplus. China's Caixin services PMI is down from 52.2 to 51.5. Canada's trade balance and a speech by BOC Governor Poloz is lined up.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 05, 2017)

USD

The US dollar had a mixed performance as it gave back some of its post-FOMC gains to the European currencies but managed to stay afloat against the comdolls. Medium-tier reports such as the Q1 unit labor costs and productivity turned out stronger than expected, along with initial jobless claims and Challenger job cuts figures. The NFP report is due today and an increase of 194K in hiring is eyed, much better than the earlier 98K increase.

EUR

The euro continued to rake in gains against its peers as most of the final services PMI readings enjoyed upgrades and the Spanish unemployment change report showed a larger than expected fall in joblessness. Euro zone retail sales also turned out better than expected with a 0.3% uptick. Only the retail PMI is due from the euro zone today but the shared currency could make another set of gains after the weekend's French presidential elections.

GBP

The pound also extended its climb when the UK services PMI beat expectations. The reading rose from 55.0 to 55.8 to reflect a faster pace of industry growth instead of dipping to 54.6. There are no major reports due from the UK today so euro zone events and Brexit-related updates could push pound pairs around.

CHF

The franc regained ground to the dollar but was still weak against its other European rivals. The Swiss SECO consumer climate index fell from -3 to -8 instead of improving to the consensus at +3. Swiss foreign currency reserves data is due today and a large increase in holdings could be evidence of currency intervention.

JPY

The yen continued to bleed against most of its rivals as the pickup in US bond yields drew traders away from the Japanese currency. Japanese banks are still closed for the holiday so there have been no reports to boost the yen, which might keep reacting to US reports until the end of this week.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were among the weakest performers, led by the Aussie which is reeling from downbeat trade balance data and weak Chinese PMI. Australia's trade surplus narrowed from 3.66 billion AUD to 3.11 billion AUD versus the projected fall to 3.33 billion AUD while Canada's trade deficit narrowed from 1.1 billion CAD to 0.1 billion CAD instead of turning to a surplus of 0.3 billion CAD. New Zealand's inflation expectations ticked up from 1.9% to 2.2% and Canada's jobs figures are coming up.

By Kate Curtis from Trader's Way