Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (Jan 09, 2018)

USD

The dollar managed to rebound against most of its peers during the US session after a weak start earlier in the day. The S&P and Nasdaq continued their push for another round of record highs but the Dow closed in the red. FOMC members Bostic and Williams shared their views on the economy and warned of potentially weaker inflation weighing on rate hike prospects. Credit card spending leading up to the Thanksgiving holidays buoyed debt up from $20.5 billion to $28 billion in November while auto and student loans also ticked higher. Only medium-tier reports such as the NFIB Small Business index and JOLTS job openings data are due from the US today.

EUR

The euro returned most of its recent gains as traders worried about more words of caution in the ECB minutes due later in the week. Recall that the central bank upgraded their growth forecasts then but the announcement was seen as less hawkish than expected since it didn't contain much rate hike clues. Data from the region was actually stronger than expected, with retail sales up 1.5% versus 1.4% and the Sentix investor confidence up from 31.1 to 32.9 versus the consensus at 31.5.

GBP

The pound was able to hold its ground as the UK government started its cabinet reshuffle to strengthen its Brexit position. The Halifax HPI was weaker than expected with a 0.6% drop in prices versus the estimated 0.2% uptick while the BRC retail sales monitor posted another 0.6% gain. There are no other major reports from the UK today.

CHF

The franc weakened to most of its peers as risk-taking was in play during the latter trading sessions. Swiss CPI came in flat instead of posting the estimated 0.1% dip. Swiss jobless rate, foreign currency reserves, and retail sales are all due today and strong readings could also spur tightening expectations from the SNB.

JPY

The yen was in a weak spot as risk-taking came into play during the latter trading sessions. Japanese average cash earnings turned out stronger than expected with a 0.9% gain versus the projected 0.6% increase but the earlier figure was downgraded. The Japanese consumer confidence index is due next and a rise from 44.9 to 45.1 is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the strongest of the bunch as it enjoyed a strong boost from the BOC Business Outlook Survey. Policymakers projected more sales activity but with some moderation, also highlighting the pickup in hiring and price levels. Australia's building approvals also beat expectations with a 11.7% gain versus the estimated 0.9% drop. Canadian housing starts data is due next.

By Kate Curtis from Trader's Way

 

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Forex Major Currencies Outlook (Jan 10, 2018)

USD

The dollar gave up ground as the yen advanced sharply in the earlier trading sessions, but the US currency was able to rebound as Treasuries hit record highs. Equities also continued their ascent in anticipation of a positive earnings season kicking off on Friday. US JOLTS job openings and NFIB Small Business Index both disappointed while import prices and final wholesale inventories data are due next.

EUR

The euro was able to hold its ground thanks to upbeat medium-tier data. German industrial production rose 3.4% versus the estimated 1.9% gain while their trade balance printed a larger surplus of 22.3 billion EUR versus the estimated 20.7 billion EUR and the earlier 19.7 billion EUR. French trade balance came in weaker than expected, though. French industrial production is due next, along with the German 10-year bond auction.

GBP

The pound struggled to stay afloat on the lack of major reports from the UK and fading sentiment from the cabinet reshuffle. Today's UK manufacturing production report could change that as analysts predict a stronger 0.3% increase compared to the earlier 0.1% uptick. The goods trade balance is also due and a larger deficit of 10.9 billion GBP from the earlier 10.8 billion GBP is eyed.

CHF

The franc continued to slide against most of its peers as data came in mixed. The unemployment rate held steady at 3.0% as expected but the earlier reading was negatively revised. Retail sales posted a better than expected 0.2% dip instead of the estimated 2.5% fall while foreign currency reserves ticked slightly higher from 738B CHF to 744B CHF. There are no other reports due from the Swiss economy today.

JPY

The yen was the start of the forex show as it jumped across the board when the BOJ reduced its JGB purchases. This revived taper hopes after officials hinted at exiting their aggressive stimulus program late last year. Data from Japan came in mixed, with average cash earnings up 0.9% versus the estimated 0.6% uptick and the consumer confidence figure slipping from 44.9 to 44.7 instead of improving to 45.1.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to score some wins against a few of their rivals but the rallies were limited as gold was weighed down by risk-taking and the Loonie didn't join in the crude oil rally. Canadian housing starts turned out weaker than expected while China's CPI fell short of estimates at 1.8% versus 1.9%. PPI was slightly better than expected at 4.9% versus 4.8% but still lower than the earlier 5.8% gain. EIA crude oil inventories are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 11, 2018)

USD

The dollar was in a bit of a weak spot due to reports that China plans on trimming its Treasury holdings. US equities also capped off their positive streak as fresh concerns on NAFTA emerged and medium-tier reports such as import prices and wholesale inventories disappointed. Initial jobless claims and PPI figures are due today, providing clues on how Friday's CPI readings might turn out.

EUR

The euro was mostly weaker after France reported a larger 0.5% drop in industrial production versus the estimated 0.4% dip. There were no other reports to support the shared currency then, so it was dragged down by weaker European equities. Italian retail sales and the region's industrial production numbers are lined up today, but the ECB minutes could be a bigger catalyst for euro action.

GBP

The pound had a mixed run as it appeared to react to currency-specific factors. UK manufacturing production was slightly better than expected at 0.4% versus 0.3% while industrial production came in line with expectations. The goods trade balance had a wider deficit of 12.2 billion GBP versus the expected 10.9 billion GBP shortfall while the earlier figure was downgraded.

CHF

The franc was able to take advantage of the risk-off vibes stemming from reports that China could trim its holdings of US bonds. There were no reports out of Switzerland and none are due today, so market sentiment could keep pushing franc pairs around.

JPY

The yen was the main beneficiary of risk-off flows after China hinted that it could reduce its holdings of US Treasuries. This comes after the BOJ's reduction of JGB purchases, which many interpreted as a taper signal. Japanese leading indicators is due next and an improvement is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the weakest of the bunch as Canadian government officials worried that Trump could pull the US out of NAFTA in the next round of talks. Canadian building permits also disappointed with a 7.7% slide versus the estimated 0.7% drop. Australia reported stronger than expected retail sales growth of 1.2% versus the estimated 0.4% uptick.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 12, 2018)

USD

The US dollar was dragged lower by downbeat PPI data, as both headline and core readings posted 0.1% declines instead of the estimated 0.2% gains. This could mean a weaker CPI for the same month, which would reinforce lower inflation expectations and rate hike odds. Headline CPI could show a 0.1% uptick while the core reading could be up by 0.2%. Retail sales data is also due today and stronger spending figures are eyed.

EUR

The euro got a strong boost from the ECB minutes as policymakers dropped more tightening hints. In particular, the minutes suggested a change in forward guidance shared by members of the committee and a shift in their inflation outlook on expectations that price pressures would eventually take hold. Italian retail sales and euro zone industrial production also beat expectations. French final CPI and Italian industrial production numbers are due next.

GBP

The pound had a mixed round as it advanced to the dollar but slid to the euro and consolidated against most of its peers. There were no major reports out of the UK economy yesterday while today has none on tap as well.

CHF

The franc trailed the euro after the release of the ECB minutes as the odds of tightening in the region meant less need for the SNB to keep the franc weak. Also, a higher EUR/CHF exchange rate would likely be positive for trade and inflation in Switzerland. There were no reports out of the Swiss economy yesterday and none are due today.

JPY

The yen gave up ground on risk-taking but managed to outpace the dollar. Japan's leading indicators ticked up from 106.5% to 108.6% but the current account surplus fell short of estimates. The Economy Watchers Sentiment index is due next and an uptick from 55.1 to 55.2 is expected.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi was one of the bigger winners of the day as risk-taking kicked in. The Aussie lagged behind as weaker gold prices came into play while the Loonie failed to follow the oil price rallies on NAFTA concerns. China's trade balance turned out stronger than expected, lifting the Aussie and Kiwi on stronger demand expectations.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 16, 2018)

USD

The dollar was down in the dumps as banks were closed on a holiday and the usual stock market rallies weren't there to buoy the currency higher. Only the Empire State manufacturing index is due today and a gain from 18.0 to 18.5 is expected. Stronger than expected results, combined with positive earnings data, could lead to a pickup for the dollar.

EUR

The euro was one of the top performers in recent sessions thanks to hawkish commentary from ECB official Hansson. He hinted that the central bank could end bond purchases in September and that currency appreciation won't hurt their inflation outlook. The region's trade balance also came in better than expected while medium-tier reports like German final CPI and Italian trade balance are lined up today.

GBP

The pound also scored decent gains and shrugged off dovish remarks from a BOE official, as well as the collapse of Carillion. There were no major reports out of the UK then while today has inflation numbers due. Headline CPI could dip from 3.1% to 3.0% while the core reading could fall from 2.6% to 2.7%, probably weighing on tightening hopes.

CHF

The franc was also one of the stronger currencies as it trailed the euro and took advantage of dollar weakness. There were no major reports out of Switzerland then while today has a speech by SNB head Jordan. Any hint of potential intervention could keep a lid on franc gains.

JPY

The yen was able to advance against the dollar but gave up ground to most of its peers. BOJ Governor Kuroda reiterated their pledge to conduct easing but bulls seem unconvinced since the central bank reduced its JGB purchases recently. Tertiary industry activity data is due next, then core machinery orders data is due tomorrow.

Commodity Currencies (AUD, NZD, CAD)

The Loonie also strengthened against most of its peers as some traders held out hopes for a BOC hike this week. Crude oil also kept advancing despite rising US output expectations. In Australia, new motor vehicle sales picked up by 4.5%. New Zealand has its GDT auction coming up.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 17, 2018)

USD

The US dollar continued to tumble across the board on concerns about a potential government shutdown and weaker performance in energy stocks. The Empire State manufacturing index fell from 18.0 to 17.7 instead of improving to 18.5. Today has the industrial production and capacity utilization rates due. FOMC member Mester also has a speech lined up after the release of the Fed Beige Book.

EUR

The euro got hit by reports that German coalition talks once again failed but was able to regain ground when ECB members gave a few more hawkish remarks. The shared currency even shrugged off warnings that currency appreciation could dampen inflation. Final CPI readings are due next.

GBP

The pound was dragged slightly lower by downbeat CPI readings as the headline figure slumped from 3.1% to 3.0% as expected while the core CPI fell below expectations to 2.5%. RPI and HPI both beat expectations, though. There are no major reports due from the UK today but MPC member Saunders has a testimony lined up.

CHF

The franc was one of the top performers of the day as dollar weakness and a bit of risk-off vibes in the earlier sessions spurred demand. SNB head Jordan refrained from jawboning the currency in his latest speech as well.

JPY

The yen also took a lot of risk-off flows form the dollar despite weaker than expected PPI data. Core machinery orders, on the other hand, beat expectations with a 5.7% jump instead of the estimated 1.3% slide. There are no other reports due from Japan so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the weakest currencies as crude oil slumped from its record highs while traders took some long positions off ahead of the BOC decision. A 0.25% rate hike is eyed but policymakers could stress that they would be cautious about future tightening. In New Zealand, the dairy auction yielded a 4.9% gain in prices while Australia reported a 1.8% gain in its Westpac consumer sentiment index.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 18, 2018)

USD

The US dollar was in a weak spot for the most part of the day but staged a late rally when Fed officials started sounding more upbeat and hawkish. The Fed Beige Book also indicated modest to moderate growth in 11 out of 12 Fed districts, with strong price pressures from most. FOMC member Mester expects more contribution from tax reform to growth while Fed official Evans shifted to a more optimistic tone. Building permits and housing starts are due next, along with the Philly Fed index.

EUR

The euro was weighed down by comments on how the currency's appreciation could dampen inflation and tightening odds. Final CPI readings were unchanged at 1.4% for the headline reading and 0.9% for the core figure. There are no major reports due from the euro zone today so ECB commentary could continue to influence the shared currency's direction.

GBP

The pound took advantage of euro weakness and was able to recover slightly against the commodity currencies despite the lack of top-tier data from the UK. Today has another empty economic calendar so market sentiment could push pound pairs around.

CHF

The franc had a mixed run but was mostly weaker to the higher-yielding currencies as risk-taking came into play. There were no reports out of the Swiss economy then and none are due today, so sentiment and currency-specific action could drive the franc.

JPY

The yen took advantage of dollar weakness but gave up some of its gains later on. There were no reports out of Japan then while today has the revised industrial production numbers due, although analysts don't expect a change from the earlier 0.6% estimate. As with the franc, sentiment could be the main driver, along with dollar direction.

Commodity Currencies (AUD, NZD, CAD)

The Loonie had a volatile run ahead of the BOC statement but eventually held its ground as Poloz and Wilkins reiterated their optimistic views. The central bank hiked by 0.25% but expressed concerns about NAFTA. Australia's employment change figure printed a 34.7K gain versus the estimated 13.2K increase. The previous reading enjoyed an upgrade from 61.6K to 63.6K. China has a bunch of major reports namely GDP, retail sales, industrial production, and fixed asset investment due.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 19, 2018)

USD

The dollar lost ground to its peers once more as the threat of a government shutdown weighed on investor sentiment. Data also turned out mostly weaker than expected, with housing starts posing a huge drop from 1.30M to 1.19M as the weather-related demand was not sustained. Preliminary UoM consumer sentiment data and inflation expectations are due next, but the focus could be on the funding bill.

EUR

The euro gave up ground once more when the likelihood of a German coalition dropped. There were also no major reports out of the region and today only has the current account balance on tap, which suggests that political updates could determine the shared currency's direction. Failure by Merkel to strike a coalition could be bearish for the euro.

GBP

The pound held its ground against most of its counterparts despite the lack of top-tier data from the UK. Today has the retail sales report due and a 0.8% decline is eyed, erasing part of the earlier 1.1% increase. Stronger than expected data, however, could prove bullish for the pound.

CHF

The franc was the main beneficiary of risk-off action and dollar weakness, as well as the selloff in the euro. There were no major reports out of the Swiss economy then and none are due today, so sentiment could continue to push franc pairs around.

JPY

The yen also took advantage of dollar weakness but was slightly weaker to the commodity currencies. Japan's industrial production reading was revised down from 0.6% to 0.5% and there are no reports due today, leaving sentiment and bond yields as potential drivers for yen price action.

Commodity Currencies (AUD, NZD, CAD)

The Aussie drew some support from better then expected jobs data but gave up some of its gains when China's data failed to impress. Most of the readings came in line with estimates, as fixed asset investment was unchanged at 7.2% instead of falling to 7.1% while industrial production ticked slightly higher. Canadian manufacturing sales is lined up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 22, 2018)

USD

The dollar is on weaker footing owing to the US government shutdown, which threatens to drag equities and bonds while it lasts. There are no major reports lined up for today and futures are pointing to a weak open for US markets as the dollar has also gapped down over the weekend.

EUR

The euro had a stronger open as German coalition talks had positive updates over the weekend. As it turned out, SPD is backing talks with Merkel but no agreement has been struck yet. Still, these could push the shared currency around over the next few days before euro zone PMIs and the ECB decision take the spotlight.

GBP

The pound held on to most of its gains from the previous week despite the 1.5% slump in retail sales and is eyeing the UK preliminary GDP report this week. Another major report lined up is the claimant count change and average earnings index, which would provide some clues on inflation and consumer spending. There are no major releases from the UK today.

CHF

The franc has been able to take advantage of dollar weakness despite the lack of top-tier data from Switzerland. SNB officials have been mum about currency intervention, so traders don't appear too wary of sudden shocks. There are still no reports due today so sentiment could keep pushing franc pairs around.

JPY

The yen has been supported thanks to dollar weakness but is behind overall to higher-yielding currencies as risk-taking is present. The BOJ decision is coming up tomorrow and yen traders might be looking to liquidate some of their positions ahead of an event risk.

Commodity Currencies (AUD, NZD, CAD)

Comdolls have held their ground and continued to advance to the dollar as China's data still showed promise. Canadian wholesale sales data is due today and a 1.0% gain is eyed. Retail sales and CPI figures are lined up throughout the week and might influence BOC hike expectations as the central bank sounded optimistic in last week's announcement.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 23, 2018)

USD

The US dollar caught a bid on reports that Congress passed another temporary funding measure to reopen the government. However, the lower-yielding currency barely held on to its gains as risk appetite took over. Only the Richmond manufacturing index is due today and a dip from 20 to 19 is eyed.

EUR

The euro was able to stand its ground as the SPD agreed to start coalition talks with Merkel's party. There were no reports from the euro zone on Monday's London session while today has the ZEW economic sentiment report. Germany could show a gain from 17.4 to 17.8 in its reading while the region could see a rise from 29.0 to 29.7.

GBP

The pound also carried on with its climb despite the lack of top-tier data as the government continued to make progress in its Brexit transition plans. UK public sector borrowing data is due next and a fall from 8.1 billion GBP to 4.2 billion GBP is eyed. The CBI industrial order expectations index is also due and a drop from 17 to 13 is expected.

CHF

The franc gave up some ground after SNB head Jordan mentioned that the currency is still overvalued despite the recent drop. Another SNB official Weber contended that the currency is highly valued but moving in the right direction. Apart from that, risk-taking has weighed on the Swiss currency as well. There are no reports due from Switzerland today.

JPY

The yen is on edge ahead of the BOJ decision as some expect the central bank to take a more upbeat tune after their adjustment on long-term bond purchases earlier this month. However, BOJ head Kuroda has also previously reiterated their commitment to their aggressive easing program. In any case, yen pairs are expecting additional volatility during the announcement and presser.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were big winners for the day thanks to risk-taking. The Aussie and Kiwi have already been on a tear for the most part of the day on upgraded growth forecasts by the IMF while the Loonie trailed behind as NAFTA concerns and a fall in crude oil lingered. Canadian wholesale sales also came in weaker than expected with a 0.7% gain versus the projected 1.0% uptick. There are no reports due from the comdoll economies today.

By Kate Curtis from Trader's Way