Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (July 03, 2017)

USD

The US dollar managed to chalk up some gains last Friday on profit-taking and strong US data. Personal income was stronger than expected at 0.4% versus 0.3% while personal spending came in line with expectations of a 0.1% uptick. The Chicago PMI and revised UoM consumer sentiment index also surpassed estimates while the core PCE price index printed the expected 0.1% gain. The ISM manufacturing PMI is due today and a rise from 54.9 to 55.0 is eyed.

EUR

The euro returned some of its recent gains even with stronger than expected flash CPI readings. The headline figure dipped from 1.4% to 1.3% versus the 1.2% consensus while the core reading rose from 0.9% to 1.1% vs. the 1.0% estimate. German and French consumer spending numbers also turned out stronger than expected. Final manufacturing PMI readings and the region's unemployment rate are due today.

GBP

The pound had a mixed run as medium-tier releases also turned out mixed. The final GDP reading was unchanged at 0.2% as expected while the current account balance beat consensus. Business investment was unchanged at 0.6% as expected. UK manufacturing PMI is due today and a dip from 56.7 to 56.4 is eyed.

CHF

The franc gave up some ground to its rivals as profit-taking took place on Friday. Swiss data was actually better than expected with the KOF economic barometer up from 102.0 to 105.5 versus the projected 102.5 figure. Swiss retail sales is due today and a 0.8% year-over-year decline compared to the earlier 1.2% drop is expected.

JPY

The yen was still the weakest in the bunch as Japanese inflation readings were weaker than expected. In particular, Tokyo's core figure was flat instead of posting the projected 0.2% uptick. Preliminary industrial production slumped 3.3% versus the projected 3.1% decline. Earlier today, the Tankan survey reported gains for both manufacturing and non-manufacturing sectors, although the latter came up short.

Commodity Currencies (AUD, NZD, CAD)

The comdolls are off to a good start after China's Caixin PMI turned out stronger than expected. This follows last week's official PMI figures, which also reflected gains for both manufacturing and non-manufacturing sectors. Canadian banks are closed for the holiday today.

By Kate Curtis from Trader's Way

 

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Forex Major Currencies Outlook (July 04, 2017)

USD

The US dollar staged a strong rebound against its peers when the ISM manufacturing PMI beat expectations. The reading climbed from 54.9 to 57.8 versus the projected 55.0 figure, buoyed by stronger hiring, new orders, and production. The index for prices dropped while inventories slid also. US banks are closed for the Fourth of July holiday today so low liquidity is expected.

EUR

The euro returned some of its recent wins as final manufacturing PMI readings from its top economies saw some downgrades. In addition, the Spanish manufacturing PMI dipped from 55.4 to 54.7 instead of improving to 55.6. Only the Spanish unemployment change report is due from the euro zone today and analysts are expecting to see a 120.3K drop in joblessness.

GBP

The pound chalked up losses across the board after the UK manufacturing PMI turned out weaker than expected. The reading dropped from a downgraded 56.3 figure to 54.3 instead of improving to 56.4. UK construction PMI is due today and a fall from 56 to 55 is eyed, with a weaker than expected result likely to push the UK currency much lower.

CHF

The franc gave up ground to the dollar and the comdolls but managed to hold steady versus the pound. Swiss retail sales turned out better than expected with a 0.3% year-over-year decline versus the projected 0.8% drop and the earlier 0.9% slide. There are no reports due from the Swiss economy today.

JPY

The yen resumed its slide against its counterparts as rising US bond yields drew traders away from the lower-yielding Japanese currency. The Tankan manufacturing index is up from 17 to 12 versus the consensus at 15 while the non-manufacturing index rose from 20 to 23, just a notch short of the estimate at 24. Japanese consumer confidence took a hit as the index dipped from 43.6 to 43.3. The BOJ core CPI is due today and a rise from 0.2% to 0.3% is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a good start after China's Caixin manufacturing PMI returned to industry expansion with a rise from 49.6 to 50.4. Canadian banks were closed for the holiday but the Loonie managed to rake in gains on higher oil prices due to the dip in US rig counts. Australian retail sales and the RBA statement are lined up next. A slower rise in consumer spending is eyed and no rate changes are expected from the Australian central bank.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 05, 2017)

USD

The US dollar had a mixed performance as traders were out on a Fourth of July holiday. Markets reopen today and the factory orders report is due, with analysts expecting to see a larger 0.4% decline compared to the earlier 0.2% dip. The FOMC minutes are also lined up and this should provide clues on when the Fed might hike rates next or start unwinding their balance sheet.

EUR

The euro was mostly weaker for the day after the Spanish unemployment change report fell short of estimates. Unemployment fell by 98.3K versus the projected reduction of 120.3K and the earlier 111.9K drop. Final services PMI and retail sales data are lined up today.

GBP

The pound was in a weak spot as the UK construction PMI also reflected a slowdown in industry growth just like the manufacturing sector. The reading fell from 56.0 to 54.8 versus the projected dip to 55.0. The services PMI is due today and this might have a more pronounced impact on sterling since the industry accounts for a larger chunk of overall growth. Analysts are expecting to see a drop from 53.8 to 53.6.

CHF

The franc edged slightly lower as there were no reports from the Swiss economy to keep it supported. There are still no major reports lined up today so franc price action could depend on market sentiment or on currency-specific events.

JPY

The yen was one of the weakest performers for the day as jitters over the North Korean missile test launch weighed on the Asian currency. The BOJ core CPI rose from 0.2% to 0.3% as expected. There are no reports due from Japan today but bond yields could continue to push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie extended its gains once more even as crude oil dipped and the Canadian manufacturing PMI indicated a slowdown in industry growth. Australia reported an improvement in its AIG services index from 51.5 to 54.8 while New Zealand yielded a 0.4% drop in dairy prices during the latest GDT auction. ANZ commodity prices posted a 2.1% gain, slower than the previous 2.1% rise.

By Kate Curtis from Trader's Way

 

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Forex Major Currencies Outlook (July 06, 2017)

USD

The US dollar rallied ahead of the FOMC minutes release but retreated upon seeing that committee members are still divided when it comes to their tightening and unwinding time line. Some thought that balance sheet reinvestment should start in a couple of months while others preferred waiting until later in the year or early next year. US ADP non-farm employment change data and the ISM non-manufacturing PMI are lined up today and another batch of strong readings could boost NFP expectations.

EUR

The euro was still mostly treading sideways as final services PMI readings came in mixed. Retail sales for the region came in line with expectations of a 0.2% gain. German factory orders, which could show a 1.9% rebound, and ECB minutes are due today. Any indication that the central bank is shifting to a less dovish stance could spur more gains for the shared currency.

GBP

The pound is under a bit of pressure as its services PMI came in slightly weaker than expected. The reading slipped from 53.8 to 53.4 in June, lower than the projected dip to 53.6 to reflect a slower pace of industry growth in line with the manufacturing and construction sectors. There are no major reports due from the UK today.

CHF

The franc was able to regain a bit of ground even though there were no major reports out of the Swiss economy. Today has the CPI lined up and a flat reading is eyed, slower than the earlier 0.2% uptick in price levels, but an upside surprise could mean more gains for the Swiss currency.

JPY

The yen was able to benefit from risk-off vibes in the Asian region as traders turned their attention to North Korea's nuclear missile launch test. Although the missile landed near Japanese territory, the safe-haven currency fared better than its US counterpart as the hermit nation aims to target US soil. There were no reports out of Japan then and none are due today so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie returned some of its recent wins when crude oil took a large hit on ongoing tensions between Saudi and Qatar. The former previously gave a list of demands and the deadline is approaching for Qatar to comply before any further sanctions are imposed. Australia's trade balance is coming up and a wider surplus of 1.00 billion AUD versus the earlier 0.56 billion AUD figure is expected. US crude oil inventories are also due and a 2.4 million draw is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 07, 2017)

USD

The US dollar returned some of its recent wins when the ISM non-manufacturing PMI's jobs component and the ADP non-farm employment change hinted at a weaker NFP read. Although the headline reading rose from 56.9 to 57.4 to reflect stronger industry growth, the jobs index fell from 57.8 to 55.8 to reflect a slowdown. The ADP figure came in at 158K versus 184K and the earlier reading was downgraded. Analysts are expecting to see a 175K increase in hiring for the NFP and a 0.3% uptick in average hourly earnings.

EUR

The euro enjoyed a strong surge after the ECB minutes revealed that policymakers are indeed looking into policy adjustments, reviving taper talks for the central bank. German and French industrial production numbers are lined up today, along with Italian retail sales and the French trade balance, and strong readings could keep traders bullish on the shared currency.

GBP

The pound managed to hold on to its recent gains and go for more as another round of hawkish hints boosted rate hike expectations. UK manufacturing production data is due today and a 0.5% gain is eyed, higher than the earlier 0.2% uptick. Industrial production is expected to be up by 0.4%. The Halifax HPI is also due and a 0.2% uptick is expected.

CHF

The franc also regained ground against its peers as sentiment improved in the European region. Swiss CPI was actually weaker than expected with a 0.1% dip in price levels instead of the projected flat reading. Swiss jobless rate and the SNB foreign currency reserves are lined up today, and a large pickup in the latter could signal central bank intervention.

JPY

The yen had a mixed performance as it reacted to country-specific flows, giving up ground to European currencies while advancing against comdolls. There were no reports out of the Japanese currency yesterday, although it did draw safe-haven support due to the North Korean ICBM test launch. Japanese average cash earnings and leading indicators are due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent gains as risk appetite took a hit. Australia's trade balance beat expectations with a higher 2.47B AUD surplus. Crude oil ticked higher on the larger than expected draw of 6.3 million barrels in the EIA report but the Loonie was unable to hold on to its gains when the Canadian trade balance missed estimates. Underlying data did show healthy gains in imports and exports, although energy shipments were still lower. Canada's jobs report is also due today and a slower gain of 11.4K in hiring is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 10, 2017)

USD

The US dollar was able to rebound against most of its counterparts on Friday thanks to stronger than expected NFP results. The report showed a 222K increase in hiring versus the projected 175K gain while the May reading was upgraded from 138K to 152K. The Fed labor market conditions index and the consumer credit report are up for release today.

EUR

The euro held on to its recent gains, buoyed by a less dovish ECB minutes that hinted at the possibility of tapering. Economic reports turned out mostly stronger than expected on Friday, led by German and French industrial production figures. Italian retail sales missed the mark but the French trade balance came in line with consensus. German trade balance and the euro zone Sentix investor confidence index are due today.

GBP

The pound took a sharp tumble when another batch of reports indicated a potential slowdown. Manufacturing production dropped by 0.2% versus the projected 0.5% uptick while industrial production slid by 0.1% instead of posting the expected 0.4% gain. There are no reports due from the UK economy today but the attention seems to be returning to Brexit talks and the UK government's weakening position.

CHF

The franc had a strong start but gave up its gains later on in the day as safe-haven flows returned to the dollar. SNB foreign currency reserves actually ticked lower from 694 billion CHF to 693 billion CHF to signal that the central bank isn't intervening in the currency market. There are no reports due from the Swiss economy today so market sentiment and currency-specific events could push franc pairs around.

JPY

The yen continued to slide lower against its peers, especially after the strong US NFP report revived dollar demand. Earlier today, Japanese core machinery orders and current account balance missed expectations, setting the tone for a potentially downbeat BOJ statement next week.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance as they continued to advance versus the yen but dipped against the dollar. Canada also printed stronger than expected jobs data as employment rose by 45.3K versus 11.4K and the unemployment rate improved from 6.6% to 6.5%. Chinese CPI and PPI are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 11, 2017)

USD

The US dollar was stuck in consolidation against most of its peers as traders took a break after the NFP rallies. The Fed labor market conditions index dipped from 3.3 to 1.5 versus the consensus at 2.5 but still chalked up its 13th consecutive positive reading. Consumer credit also ticked higher to reflect stronger financial confidence. The NFIB small business index and JOLTS job openings data are lined up today, along with final wholesale inventories and FOMC member Brainard's speech.

EUR

The euro gave back some of its recent wins to the Aussie and Loonie but managed to hold steady against the rest of its peers. The German trade balance widened from a surplus of 19.7 billion EUR to 20.3 billion EUR and the Sentix investor confidence index dipped from 28.4 to 28.3. Only the Italian industrial production report is due today and a 0.5% rebound is eyed.

GBP

The pound had a mixed run as it was stuck in consolidation to the dollar, euro, and yen, weaker against the Aussie and Loonie, but stronger against the Kiwi. There were no reports out of the UK economy yesterday while today saw a 1.2% rebound in the BRC retail sales monitor. MPC members Haldane and Broadbent are set to give testimonies today and hawkish remarks could lift the UK currency.

CHF

The franc weakened against most of its major counterparts as risk-taking came into play. There were no major reports out of Switzerland yesterday and none are due today so market sentiment and currency-specific action could push franc pairs around.

JPY

The yen was off to a good start but later on returned its gains to its rivals. Economic data from Japan was weaker than expected as core machinery orders slumped by 3.6% instead of posting the estimated 1.7% gain while the current account surplus fell from 1.81 trillion JPY to 1.40 trillion JPY. There are no major reports lined up from Japan today so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdoll group had a mixed performance, with the Aussie and Loonie raking in gains and the Kiwi giving up ground. The Canadian currency is still enjoying its gains after the strong jobs report last Friday and traders are pricing in an upbeat BOC decision later this week. Meanwhile, the Aussie shrugged off weaker than expected Chinese CPI of 1.5% versus the consensus at 1.6%. Australia's NAB business confidence and home loans data are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 12, 2017)

USD

The dollar was mostly lower against its peers on mixed Fed rhetoric and downbeat medium-tier data. Both final wholesale inventories and JOLTS job openings data came in below expectations. Fed Chairperson Yellen has a testimony scheduled today and market watchers are eager to find out about her views on the latest NFP report and its impact on Fed policy.

EUR

The euro surged against its peers as it served as the safe-haven in the European region. Italian industrial production came in stronger than expected at 0.7% versus the projected 0.5% uptick. German WPI and the region's industrial production numbers are lined up today, with the former expected to show a 0.2% rebound and the latter possibly showing a 1.0% jump.

GBP

The pound was off to a good start but it wound up giving up a lot of its recent gains when MPC member Broadbent was not as hawkish as many expected. He focused more on Brexit trade risks during his speech and how it could impact costs and business activity. UK jobs data is due today and the claimant count could come in at 10.5K versus the earlier 7.3K increase. The average earnings index might slip from 2.1% to 1.8% to put more downside pressure on consumer spending.

CHF

The franc was mostly weaker against its peers even though there were no major reports out of the Swiss economy. There are still no reports lined up today so the currency could move to the tune of market sentiment and currency-specific events.

JPY

The yen was also a big loser but it managed to regain some ground to the dollar. Japanese preliminary machine tool orders surged by 31.1% on a year-over-year basis but traders are still pricing in dovish BOJ remarks for next week. The tertiary industry activity index is due today and a 0.5% decline is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start but recovered later in the day. Australia's NAB business confidence index improved from 8 to 9 while Canada's housing starts beat expectations at 213K. The BOC is set to make its policy decision today and hawkish remarks are eyed, although profit-taking scenarios could also come into play. US crude oil inventories data will also be released and a draw of 3.2 million barrels in stockpiles is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 13, 2017)

USD

The US dollar gave back some of its recent gains as Yellen downplayed the strong jobs figures while acknowledging that weak inflation remains a topic of discussion. She did mention that balance sheet unwinding could begin later this year. US PPI and initial jobless claims are due next, along with another speech by Fed head Yellen.

EUR

The euro gave up ground against most of its counterparts even after the region's industrial production report printed a stronger than expected 1.3% gain. German WPI fell flat instead of posting the projected 0.2% rebound. German and French final CPI readings are due next.

GBP

The pound enjoyed a strong rally after the UK jobs figures came in mostly stronger than expected. Claimant count rose by only 6K versus the projected 10.3K increase in joblessness while the unemployment rate improved from 4.6% to 4.5%. The average earnings index dipped from 2.1% to 1.8% as expected, upping the pressure on the BOE to act to curb overall inflation so that consumer spending can keep up. Only the BOE credit conditions survey is due next.

CHF

The franc resumed its slide against most of its counterparts even though there were no reports out of the Swiss economy. The Swiss PPI is due today and a flat reading is eyed, which would still be an improvement over the previous 0.3% decline. A stronger than expected read could revive gains for the currency while a disappointing figure could renew talks of intervention.

JPY

The yen had a mixed run as it reacted mostly to country-specific events. Data from Japan was slightly better than expected at a 0.1% dip versus the projected 0.5% drop and there are no reports due today. Risk sentiment and global bond prices could continue to push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie enjoyed a strong boost from the hawkish BOC hike as the central bank increased rates by 0.25% while signaling scope for further hikes. Policymakers judged the slowdown in inflation as a result of temporary factors and upgraded their growth forecasts for the year. China's trade balance came in stronger than expected at a surplus of 294 billion CNY, which is positive for the Aussie and Kiwi, as well as overall risk sentiment. EIA crude oil inventories also posted a larger than expected draw of 7.6 million barrels in stockpiles.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 14, 2017)

USD

The US dollar was unable to establish a clear direction in trading even with several top-tier reports released. Headline PPI came in better than expected with a 0.1% uptick versus the projected flat reading while the core version of the report also showed a 0.1% increase, short of the 0.2% consensus. Initial jobless claims declined from the other week's 250K to 247K to show positive hiring momentum. Fed head Yellen had another testimony in which she shared that the balance sheet runoff could impact the yield curve and that this, in turn, could influence their future rate adjustments. CPI readings are due today and small gains are eyed, along with June retail sales data.

EUR

The euro tossed and turned as ECB chatter pushed the shared currency around. There have been rumors that Governor Draghi will join the Jackson Hole Symposium and that he might discuss the idea of tapering stimulus then. As for data, German and French final CPI readings were unchanged and trade balance readings from Italy and the euro zone are lined up today.

GBP

The pound was able to recoup its earlier losses to the dollar, yen, and euro but was still lower against the comdolls. There were no major reports out of the UK economy yesterday, which explains the currency-specific price action of pound pairs. There are still no reports lined up from the UK today so similar price action could be seen.

CHF

The franc was one of the biggest losers in recent sessions as traders showed stronger appetite for higher-yielding currencies, leaving the SNB's negative deposit rate less appealing. Swiss PPI also turned out weaker than expected with a 0.1% dip versus the projected flat reading. There are no reports due from the Swiss economy today.

JPY

The yen also gave up ground to most of its counterparts as risk-taking was in play. There have been no major reports out of Japan yesterday while today has the revised industrial production figure due. Apart from that, global bond yields and USD demand could also push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to chalk up gains against the rest of their peers thanks to the pickup in risk appetite. Chinese trade balance also beat expectations, sending positive prospects for its trade partners Australia and New Zealand. There are no other reports lined up from the comdoll economies for the rest of the day so risk sentiment could be the main driver of price action.

By Kate Curtis from Trader's Way