Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (July 17, 2017)

USD

The US dollar tumbled across the board on Friday when economic reports came in mostly weaker than expected. Headline CPI posted a flat reading instead of the estimated 0.1% uptick while the core CPI had a meager 0.1% gain instead of the estimated 0.2% increase. Headline and core retail sales were down 0.2% while preliminary UoM consumer sentiment also fell short of estimates. Only the Empire State manufacturing index is due today and a fall from 19.8 to 15.2 is expected.

EUR

The euro had a mixed round as it regained ground to the dollar and yen but caved to the pound and commodity currencies. Economic data came in mixed as the Italian trade balance beat expectations but the region's reading fell short. Euro zone final CPI readings are lined up today and traders are not expecting any revisions.

GBP

The pound was able to stay afloat on Friday even though there were no major reports out of the UK. Prior to this, UK jobs data beat expectations but wage inflation indicated weakness, possibly upping the pressure on the BOE to act. There are no major reports due today but traders might start pricing in expectations for the UK CPI report.

CHF

The franc weakened against its peers as risk appetite stayed in play. There were no reports out of the Swiss economy then and none are due today, so market sentiment could keep pushing franc pairs around.

JPY

The yen was able to regain some ground against the dollar but was in a weak spot to its peers leading up to this week's BOJ decision. Japan's industrial production figure was downgraded to show a larger 3.6% slide versus the initially reported 3.3% drop. Japanese banks are closed for the holiday today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness once more as risk appetite stayed in play. Chinese reports are up for release today, with slight dips in GDP, retail sales, and fixed asset investment eyed. Industrial production is estimated to hold steady at 6.5%. New Zealand will be printing its Q2 CPI as well and analysts are expecting to see a 0.2% increase, much slower than the earlier 1.0% gain.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 18, 2017)

USD

The dollar managed to edge slightly higher even though data came in weaker than expected. The Empire State manufacturing index fell from 19.8 to 9.8 to indicate a slower pace of industry growth compared to the projected dip to 15.2. Only the US import prices report is due today and a 0.2% drop is eyed, smaller than the earlier 0.3% decline.

EUR

The euro was able to hold its ground as the return of Brexit concerns in the UK drove safe-haven demand for the shared currency. Final CPI readings were unchanged at 1.3% for the headline reading and 1.1% for the core figure. The German ZEW economic sentiment index is due next and a dip from 18.6 to 17.8 is expected. The region's ZEW index is slated to fall from 37.7 to 37.2.

GBP

The pound was in a weak spot once more as Brexit negotiations took place. UK CPI is up for release today, with the headline figure projected to hold steady at 2.9% while the core reading could also stay unchanged at 2.6%. PPI input prices could chalk up a 0.8% decline while the output price could see a meager 0.1% uptick. BOE Governor Carney has a speech as well so it could bring more volatility for pound pairs.

CHF

The franc regained some ground against its peers as risk-off flows returned. There were no reports out of the Swiss economy yesterday and none are due today so risk sentiment could keep pushing franc pairs around.

JPY

The yen was able to get back on its feet when risk-taking paused in the latter trading sessions. Japanese banks were closed for the holiday yesterday and there are no reports due today so risk sentiment could still be in the driver's seat.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a strong start when China printed upbeat data. GDP rose by 6.9% instead of showing the slower 6.8% consensus while retail sales and industrial production reflected strong domestic demand. However, the Kiwi returned its gains when New Zealand's quarterly CPI posted a flat reading instead of the projected 0.2% gain. RBA minutes are due next and New Zealand will have its GDT auction in the next Asian session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 19, 2017)

USD

The dollar was dragged lower by the healthcare bill setback in Senate. As it turns out, at least three Republicans are set to vote against the bill, along with Democrat lawmakers. This reminded market watchers of the lack of progress in terms of fiscal policy, which means that tax reform could be pushed back much later. As for data, import prices posted the 0.2% dip as expected and the NAHB housing market index dipped from 66 to 64 instead of improving to 67. US housing starts and building permits are lined up next.

EUR

The euro regained some ground against its counterparts as risk appetite took a hit on Tuesday. Economic data from the region was actually weaker than expected as the German ZEW index slipped from 18.6 to 17.5 versus the 17.8 forecast while the region's ZEW is down from 37.7 to 35.6 to reflect weaker optimism. There are no major reports due from the euro zone today, leaving traders to price in expectations for the ECB statement tomorrow.

GBP

The pound was one of the weakest performers for the day as UK inflation readings fell short. Headline CPI is down from 2.9% to 2.6% while core CPI dropped from 2.6% to 2.4%, lessening pressure on the central bank to tighten monetary policy. There are no reports due from the UK today.

CHF

The franc was able to regain some ground as risk aversion popped back in the financial markets. There were no reports out of the Swiss economy then and none are due today so market sentiment could continue to push franc pairs around.

JPY

The yen regained some ground on risk appetite and dollar weakness. There were no reports out of Japan yesterday and none are due today so market sentiment could stay in play or traders might start pricing in expectations for the upcoming BOJ decision.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was on stronger footing after the release of the RBA minutes as policymakers didn't sound as dovish as some expected. Instead, the central bank struck a neutral tone and signaled less preference for rate cuts than before. New Zealand reported a 0.2% uptick in dairy prices during the latest GDT auction while the API reported a surprise build in inventories. US crude oil stockpiles data from the EIA is due today and analysts are hoping to see a 3.6M reduction.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 20, 2017)

USD

The US dollar had a mixed run as it mostly functioned as a counter currency. Data was stronger than expected, with building permits up from 1.17M to 1.25M and housing starts up from 1.12M to 1.22M. Initial jobless claims and the Philly manufacturing index, which could dip from 27.6 to 23.4, are due next.

EUR

The euro returned some of its recent gains as traders are reducing their exposure to the ECB monetary policy statement. No actual rate changes are eyed but traders are hoping to hear more hints of tapering from Governor Draghi. He did drop some upbeat remarks during his previous testimonies but policymakers cautioned that markets may have misinterpreted these comments. German PPI and euro zone current account balance is also eyed.

GBP

The pound is in a weak spot due to Brexit concerns and weak CPI data, which has lowered BOE rate hike expectations. There have been no reports out of the UK economy yesterday while today has the retail sales report due. A 0.4% rebound over the previous 1.2% decline is eyed but another drop could remind traders that consumer spending is reeling from higher price levels.

CHF

The franc remained in a weak spot against its rivals on resurfacing jitters in the European region. There were no reports out of the Swiss economy yesterday while today has the trade balance on tap. A narrower surplus of 2.89 billion CHF is eyed compared to the previous 3.40 billion CHF figure.

JPY

The yen regained a bit of ground as traders liquidated some of their short holdings ahead of the BOJ decision. No actual policy changes are eyed but dovish remarks or jawboning could push the yen lower once more. However, a neutral stance could lead to some gains for the Japanese currency. Earlier today, the trade balance was printed and a lower surplus of 0.08T JPY was seen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to hold on to most of their recent gains as EIA crude oil stockpiles posted a larger than expected draw of 4.7 million barrels. This marks the third consecutive weekly drop in inventories so global oversupply concerns appear to be easing. Australia is set to report is jobs figure next and a 14.4K gain in hiring is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 21, 2017)

USD

The dollar is still being bogged down by issues surrounding the Trump administration, from the failure to pass the Obamacare repeal in Senate to the ongoing investigation into Trump's dealings with Russia. Lead investigator Mueller said that they will be looking into the President's business transactions with Russians in the past. Data from the US was mostly stronger than expected as initial jobless claims and the CB leading index beat forecasts, but the Philly Fed index chalked up a steeper fall from 27.6 to 19.5. There are no reports due from the US economy today.

EUR

The euro started edging lower ahead of the ECB decision as traders reduced their exposure to the event but the shared currency regained ground even after Governor Draghi dropped dovish remarks. The ECB Governor acknowledged that growth is picking up but that this has yet to translate to stronger inflation, which he also mentioned isn't quite up to the level for them to start discussing tapering. There are no reports due from the euro zone today, so traders could keep pricing in their reaction that it's only a matter of time before the ECB reduces asset purchases.

GBP

The pound was still in a weak spot even though the UK reported stronger than expected retail sales for June. Consumer spending rebounded by 0.6% while the previous figure enjoyed a small upgrade from an initially reported 1.2% slump to just 1.1%. Only the UK public sector net borrowing report is due today but the focus could remain on how shaky the economy is looking with Brexit discussions ongoing.

CHF

The franc gave up ground to most of its peers as traders flocked back to the euro instead. Also, Swiss trade balance turned out weaker than expected with a surplus of 2.81 billion CHF versus the projected 2.89 billion CHF figure and the earlier 3.39 billion CHF reading. There are no reports due from the Swiss economy today.

JPY

The yen got back on its feet against some of its peers as the BOJ refrained from dropping more dovish remarks in their statement. The central bank did scale back its CPI forecast but this barely drew bears back in. There are no reports due from the Japanese economy today so risk sentiment and reactions to USD movements could stay in play.

Commodity Currencies Outlook (AUD, NZD, CAD)

The comdolls had a mixed round as they returned some of their gains to the euro and yen while advancing to other counterparts. Australia's jobs report was slightly weaker than expected with a 14K gain in June and a downgrade in the May figure. Canada has its CPI and retail sales figures up for release next and strong readings could reinforce BOC hike expectations. RBA policymakers Debelle and Bullock are set to give speeches as well.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 24, 2017)

USD

The US dollar remains in a weak spot leading up to this week's FOMC statement. No actual rate changes are expected but traders are expecting a less upbeat outlook and some more details on when the balance sheet runoff might start. There were no reports out of the US on Friday while today has flash manufacturing and services PMIs on tap.

EUR

The euro held on to its gains versus the dollar but retreated to the yen on lack of BOJ dovishness. There were no major reports out of the euro zone on Friday while today has the flash manufacturing and services PMI readings from the top economies. Stronger than expected data could confirm that it's only a matter of time before the ECB tapers asset purchases.

GBP

The pound was one of the weakest performers as downbeat CPI weighed on BOE rate hike prospects even as UK retail sales beat expectations. Public sector borrowing was also weaker than expected. There are no reports due from the UK economy today.

CHF

The franc had a mixed round as it mostly reacted to currency-specific factors. There were no reports out of the Swiss economy on Friday and none are due today so market sentiment could keep pushing franc pairs around.

JPY

The yen advanced on the lack of BOJ dovishness in their policy statement earlier in the week and on expectations of a more cautious FOMC statement this week. There were no reports out of Japan on Friday while today has the flash manufacturing PMI. A dip from 52.4 to 52.2 was reported for July, lower than the estimated drop to 52.3.

Commodity Currencies (AUD, NZD, CAD)

The comdolls broke higher to the US dollar but gave up some ground to the Japanese yen. Data from Canada turned out mixed as the core retail sales figure missed expectations while the headline figure printed a 0.6% gain, outpacing the 0.3% consensus. Headline CPI came in line with expectations of a 0.1% dip. Only the Canadian wholesale sales report is due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 25, 2017)

USD

The US dollar drew a bid in the latest New York session upon seeing slightly stronger than expected flash PMI readings. The flash manufacturing PMI is up from 52.0 to 53.2, higher than the forecast at 52.3, while the services PMI held steady from an upgraded 54.2 figure. Existing home sales printed a dip to 5.52M. The CB consumer confidence index is due today and a fall from 118.9 to 116.5 is expected.

EUR

The euro was unable to sustain its climb when euro zone PMI readings fell short of estimates, with the exception of the French flash manufacturing PMI. The German Ifo business climate index is lined up today and a dip from 115.1 to 114.9 is expected. Another weak result could continue to dampen ECB tapering expectations.

GBP

The pound managed to regain some ground, despite the lack of top-tier data from the UK. Today has the CBI industrial order expectations figure lined up, which could fall from 16 to 12, along with a speech by BOE MPC member Haldane who might reiterate his dovish views.

CHF

The franc had a mixed performance as it mostly reacted to its counterparts. There were no reports out of the Swiss economy yesterday to give the currency a strong direction anyway, and there are still no reports due today so market sentiment could push franc pairs around.

JPY

The yen gave up some ground when the dollar recovered upon seeing upbeat medium-tier data. Traders had been buying up the Japanese currency leading up to the FOMC statement in anticipation of less hawkish remarks, but the latest batch of PMI reports gave hope that the Fed could maintain its rate hike timeline. The BOJ minutes were released but failed to spur volatility for yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the biggest winners for the day as the pickup in crude oil boosted the Canadian currency. After the OPEC meeting with non-OPEC members like Russia, Saudi Arabia pledged that they will push for significant measures to boost the commodity price. Nigeria also made an informal pledge to keep their production levels limited. New Zealand's trade balance is due next, along with a speech by RBNZ policymaker McDermott.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 26, 2017)

USD

The US dollar drew a strong boost from news that the Senate has voted to open the debate on healthcare reform. VP Mike Pence broke the tie and opened the floor for amendments on the current bill, reviving hope that the Trump administration could make progress in its fiscal agenda. Economic data also came in strong ahead of today's FOMC decision, which might shed more light on the Fed's balance sheet runoff timing and the odds of another rate hike in September or December.

EUR

The euro held steady against most of its counterparts as data came in mixed. The German Ifo business climate index rose from 115.2 to 116.0 to reflect improving conditions versus the projected dip to 114.9. However, German import prices chalked up a steeper than expected 1.1% slide instead of the estimated 0.7% dip to signal weaker price pressures. There are no major reports due from the euro zone today.

GBP

The pound enjoyed a bit of a boost ahead of BOE member Haldane's speech as many expected him to shift to a less dovish stance. UK CBI industrial order expectations fell from 16 to 10 versus the projected reading at 12. The UK preliminary GDP reading is due next and a slightly stronger than expected growth figure of 0.3% is eyed versus the earlier 0.2% uptick.

CHF

The franc had a mixed performance as it reacted mostly to currency-specific factors on the lack of top-tier data from Switzerland. Today has the UBS consumption indicator and the Credit Suisse Economic Expectations index on tap, and improvements could shore up the franc while weak figures could lead to declines.

JPY

The yen gave up ground to most of its peers, owing to the strength in the US dollar. Traders continue to price in positive expectations for the FOMC statement, which is driving bond yields higher and leading to weaker demand for the lower-yielding yen.

Commodity Currencies (AUD, NZD, CAD)

The Loonie scored another round of gains after the API report revealed a much larger than expected draw in stockpiles, easing oversupply concerns and lifting expectations for the EIA report. This is expected to report a draw of 3.3 million barrels in stockpiles. New Zealand reported a larger than expected trade surplus of 242M NZD versus the projected 147M NZD figure and the earlier 74M NZD surplus. Australia's headline CPI missed the mark with a 0.2% uptick versus the expected 0.4% increase but the core reading came in line with consensus at 0.5%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 27, 2017)

USD

The US dollar advanced on positive expectations for the FOMC but soon gave up its gains and more when the statement disappointed. Instead of giving more details on their balance sheet reinvestment, the Fed simply said that the runoff would start "relatively soon." Market participants also noted a slight downgrade in inflation assessment from "declined recently" to "declined" and "running below 2%". US durable goods orders data is due next and weaker than expected reports could continue to dampen Fed rate hike hopes.

EUR

The euro took advantage of dollar weakness but was still in a weak spot against the commodity currencies. There were no major reports out of the euro zone yesterday, which explains the shared currency's lack of direction. The Spanish unemployment rate and the German GfK consumer climate index are due today, with the latter expected to tick higher from 10.6 to 10.7.

GBP

The pound was able to hold its ground when the UK GDP reading came in line with estimates of 0.3% growth versus the previous 0.2% expansion for Q2. Components showed declines in industrial production and construction while the services sector posted 0.5% growth. CBI realized sales data is due today and a fall from 12 to 10 is expected.

CHF

The franc was mostly weaker against its peers, except against the dollar, even though data turned out stronger than expected. The UBS consumption indicator rose from 1.32 to 1.38 while the Credit Suisse Economic Expectations index surged from 20.7 to 34.7. There are no reports due from the Swiss economy today.

JPY

The yen was able to take advantage of dollar weakness but still chalked up losses to the commodity currencies. There were no major reports out of Japan but it looks like risk-taking had been in play and weighed on the lower-yielding currency. There are still no reports due from Japan today so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly stronger against their peers, led by the Loonie which drew a strong boost from crude oil. The EIA reported a draw of 7.2 million barrels in stockpiles versus the projected reduction of 3.3 million barrels, marking a full month in falling inventories. Australian import prices data are due next and a weaker 0.7% uptick is eyed compared to the earlier 1.2% gain.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 28, 2017)

USD

The US dollar bounced back from its FOMC tumble when some medium-tier reports beat expectations. Headline durable goods orders jumped 6.5% versus the projected 3.5% increase while core durable goods was slightly weaker at 0.2% versus 0.4%. The goods trade balance showed a narrower deficit to indicate stronger export activity and a positive contribution to GDP. The advance GDP reading is due later today and a 2.5% expansion is eyed, stronger than the previous 1.4% growth figure.

EUR

Economic data from the euro zone turned out slightly weaker than expected, keeping ECB tapering expectations in play. The German GfK consumer climate index climbed from 10.6 to 10.8, higher than the projected rise to 10.7, while the Spanish unemployment rate improved from 18.8% to 17.2%. French flash GDP, German preliminary CPI, Spanish flash CPI and GDP are all lined up today.

GBP

The UK printed mixed economic reports, with the CBI realized sales index climbing from 12 to 22 instead of dipping to 10 and the GfK consumer confidence index slipping from -10 to -12 instead of improving to -11. There are no reports due from the UK economy today so the pound could take its cue from market sentiment and Brexit updates.

CHF

The franc had a mixed run as it reacted mostly to currency-specific events but it was mostly lower on potential SNB intervention. The KOF economic barometer is up for release today and a rise from 105.5 to 105.9 is expected, possibly renewing some support for the Swiss currency.

JPY

The Japanese yen gave up some ground as dollar demand returned in anticipation of an upbeat advance GDP reading. Earlier today, data from Japan turned out mostly stronger than expected, renewing support for the currency. National core CPI posted a 0.4% gain as expected while the Tokyo core CPI rose by 0.2% versus the estimated 0.1% uptick. The unemployment rate improved from 3.1% to 2.8% and household spending rebounded by 2.3%. Retail sales, however, fell short at a 2.1% year-over-year gain.

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to hold on to their recent gains as a bit of risk aversion and profit-taking materialized. Australian import prices dropped 0.1% instead of posting the projected 0.7% gain in Q2. The Loonie was also bogged down by talks of how the Canadian government wasn't too pleased about the BOC hike. The Canadian monthly GDP is due next and another 0.2% uptick is eyed.

By Kate Curtis from Trader's Way