Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Oct 18, 2017)

USD

The US dollar managed to stay afloat thanks to mostly upbeat medium-tier data and positive Fed rhetoric. FOMC member Harker highlighted the tight labor market while Kaplan wrote about waiting to see if 2% inflation is achieved in the medium term or not. FOMC members Dudley and Kaplan have testimonies scheduled today, ahead of the release of US building permits and housing starts.

CAD

The Loonie was off to a rough start but later on staged a strong rally after Mexico and Canada rejected the latest set of NAFTA proposals from the US. Another round of talks is scheduled next month but many think that this could go on until after the end of the year, which means that Canada can stick with the current trade agreements for longer. Canadian manufacturing sales is due next and a smaller 0.1% dip is eyed.

EUR

The euro held its ground even though economic data turned out mostly weaker than expected. The German ZEW economic sentiment index rose from 17.0 to 17.6 but this was way short of the 20.1 consensus while the region's index fell from 31.7 to 26.7 instead of improving to 34.2. There were no changes in the final core and headline CPI readings. ECB head Draghi has a speech lined up next.

GBP

The pound was weighed down heavily by downbeat BOE rhetoric, causing traders to shrug off positive inflation data. The headline CPI rose to 3.0% as expected while the core figure held steady at 2.7%. Officials Carney, Tenreyo, and Ramsden shared the view that Brexit could complicate economic performance so they weren't so convinced that a rate hike is needed just yet. Jobs data is due next and an increase of 1.3K in claimants is eyed, but the average earnings index could draw more attention.

JPY

The Japanese currency was mostly weaker against its peers as dollar demand persisted. There were no major reports from Japan so traders were more fixated on the potential outcome of the upcoming elections. Stronger support for PM Abe would be a vote in favor of easy monetary policy, which could continue to keep a lid on yen gains. There are no reports due from Japan today.

Commodity Currencies

The Kiwi took some hits after the GDT auction revealed a 1% drop in dairy prices, following the earlier 2.4% slump. This could prompt downgrades from Fonterra in terms of milk payout forecasts, which could give the RBNZ reason to stick to its neutral stance for much longer. Earlier today, Australia's MI leading index showed a 0.1% rebound from the earlier 0.1% drop.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 19, 2017)

USD

The US dollar was able to brush off downbeat housing market data as traders were already aware that these were skewed by the recent hurricanes. Also Fedspeak was more hawkish than usual, with members Kaplan and Dudley acknowledging the tightness in the labor market and its potential impact on wages and inflation. The Fed Beige Book also underscored these views and repeated that the economy is expanding at a modest to moderate pace. Initial jobless claims and Philly Fed index are due next.

EUR

The euro was in a weak spot as political uncertainties took over price action in the absence of top-tier data or upbeat remarks from Draghi. Looking ahead, updates on Austria's polls could continue to keep traders on edge in the region while the pickup in risk-taking could also dampen demand for the currency.

GBP

The pound had a positive reaction to the jobs report as the average earnings index held steady at an upgraded 2.2% reading. Claimant count came in at 1.7K versus the projected 1.3K figure. Brexit updates led to a bit of volatility but the UK currency managed to maintain its rally. UK retail sales data is due next and a 0.1% dip is expected.

CHF

The franc slid lower as risk appetite came into play and there were no reports to boost the currency. Swiss trade balance is due today and analysts are expecting to see a a higher surplus of 2.47 billion CHF compared to the earlier 2.17 billion CHF figure.

JPY

The yen was one of the weakest performers for the day as risk-taking took hold of the markets. Global bond yields were also up and yen bulls might have reduced their exposure to the weekend's elections. Japan's trade balance missed expectations and showed a smaller surplus of 0.24 trillion JPY compared to the estimated 0.31 trillion JPY figure.

Commodity Currencies (AUD, NZD, CAD)

The Loonie enjoyed a strong boost from better than expected Canadian manufacturing sales data and more indications that the OPEC could extend its output deal. Sources have revealed that a nine-month extension is possible while others have said that the cartel is looking at a time frame of six to nine months. EIA crude oil stockpiles also saw a larger than expected draw of 5.7 million barrels. In New Zealand, NZ First Party leaders is set to announce his decision on which party to support today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 20, 2017)

USD

The US dollar held steady for the most part of the day as traders waited to find out how Trump's meeting with Yellen went. Reports still indicated that the President is leaning towards appointing Powell, who is considered a dovish option. Data came in better than expected as initial jobless claims fell from 244K to 222K while the Philly Fed index improved from 23.8 to 27.9 versus the estimated drop to 21.9. US existing home sales is due next.

EUR

The euro was able to hold its ground and chalk up a few gains despite the lack of top-tier data from the euro zone. Today has the German PPI and current account balance on tap and upbeat data could allow the shared currency to pocket more gains, although political uncertainty in Spain and Austria could pose upside roadblocks.

GBP

The pound took another hit on downbeat retail sales data as consumer spending tanked 0.8% instead of dipping by 0.1%. Brexit updates were also front and center as EU leaders upped the pressure on May's government to speed up negotiations. Only the public sector net borrowing report is due from the UK today, so Brexit updates, particularly those coming from the EU summit in Brussels, could continue to drive pound price action.

CHF

The franc was able to benefit from weakness in other European currencies as it emerged as the safe-haven in the region. Swiss trade balance also beat expectations at 2.92 billion CHF versus the estimated 2.47 billion CHF figure. There are no reports due from the Swiss economy today so market sentiment could be key.

JPY

The yen was also one of the big winners for the day as traders steered clear from the dollar but saw reason to pile on safe-haven holdings. Japan's all industries activity index was slightly weaker than expected at a 0.1% uptick versus the estimated 0.2% gain. There are no reports due from Japan today but persistent risk-off moves could continue to keep the yen afloat.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi tanked when NZF announced its support for the Labour party instead of National, as the former is seen to be leaning strongly towards protectionist policies. In effect these could limit trade and migration, two of the main drivers of growth in the country for the past few years. Data from China came in mostly in line with estimates while Australia's jobs figures surpassed consensus. Canada has its CPI and retail sales numbers due next and strong readings could reinforce BOC hike expectations.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook ( October 23 2017)

USD

The US dollar was mostly stronger at the end of the previous week as medium-tier data came in better than expected. Existing home sales rose from 5.35 million to 5.39 million instead of falling to 5.30 million. The federal budget balance also showed a surplus of 8.0 billion USD instead of the estimated 0.9 billion USD deficit and was a huge improvement over the earlier 107.7 billion USD shortfall. There are no reports due from the US today so the attention could be on Trump's next Fed Chair pick.

EUR

The euro had a mixed run as it weakened to the dollar and yen but held its ground against the commodity currencies. German PPI beat expectations with a 0.3% gain versus the 0.1% consensus while the region's current account surplus widened to 33.3 billion EUR versus the estimated 26.2 billion EUR figure. To top it off, the previous reading enjoyed an upgrade to 31.5 billion EUR. The region's consumer confidence index is due next and no change to the earlier -1 reading is eyed.

GBP

The pound pulled off a strong finish on Friday after the UK public sector borrowing report printed better than expected results. The deficit stood at 5.3 billion GBP compared to the estimated 5.7 billion GBP shortfall while the previous reading was revised to show a smaller deficit of 4.1 billion GBP. CBI industrial order expectations data is due next and a rise from 7 to 9 is expected.

CHF

The franc was mostly stuck in consolidation on Friday, except against the British pound. There were no reports out of the Swiss economy then and none are due today so market sentiment and currency-specific action could come into play.

JPY

The yen had a weak finish last week and gapped down to its counterparts this week as the elections in Japan took place. Abe emerged with strong support for his leadership and political party, which means a likely tax hike in 2019 and constitutional reform. This also means support for the BOJ's easy monetary policy. There are no reports from Japan today so risk sentiment and post-election moves could stay in play.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi continued to bleed against its counterparts throughout Friday as the decision of NZF to support the Labour Party weighed on economic prospects. In Canada, headline CPI was weaker than expected at 0.2% versus 0.3% while core retail sales posted a surprise 0.7% drop instead of the estimated 0.3% gain. Headline retail sales was also below expectations with a 0.3% drop instead of the 0.5% gain, weighing heavily on BOC hike forecasts. Canadian wholesale sales is due next and a 1.1% increase is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 24, 2017)

USD

The US dollar rallied then reversed to start the week as equities ended the day in the red on weaker tech and industrials performance. There were no reports out of the US economy on Monday as traders kept their focus on Trump's next Fed Chairperson appointment. Medium-tier reports such as flash manufacturing and services PMIs, as well as the Richmond manufacturing index, are lined up next.

EUR

The euro was off to a slow start as it retreated to some of its peers while moving sideways against the rest. Euro zone consumer confidence was unchanged as the index held steady at -1 as expected. Flash manufacturing and services PMIs from Germany and France are lined up today and strong figures could set the tone for an upbeat ECB decision later this week.

GBP

The pound managed to hold its ground despite dovish remarks from BOE MPC member Cunliffe. While he acknowledged that the economy has seen improvements, he also warned that a hike is still an "open question" on timing since real incomes are being squeezed by subdued wage growth and imported inflation on sterling weakness. The CBI industrial order expectations index fell from 7 to -2 instead of improving to 9, hinting at weaker business conditions down the line.

CHF

The franc was able to regain its bearings later in the day when risk aversion peeked back in the markets. There were no reports out of the Swiss economy yesterday and none are due today, so the franc could take its cue from euro zone data or overall market sentiment once more.

JPY

The yen gapped down over the weekend then filled this gap later in the day as risk-off flows returned. There were no reports out of Japan yesterday but the aftermath of Abe's victory weighed on the currency in anticipation of another tax hike in 2019 and a continuation of the BOJ's easy monetary policy. Today has the flash manufacturing PMI lined up and a gain from 52.9 to 53.1 is expected.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent gains to their lower-yielding counterparts when risk-taking took a step back in the latter sessions. Canadian wholesale sales rose 0.5% versus the projected 1.1% gain while Australia's leading index chalked up a 0.1% uptick, lower than the previous 0.2% increase. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 25, 2017)

USD

The US dollar tossed and turned as the lack of top-tier data left traders extra sensitive to updates from Washington. Fears that the Trump tax plan could lose votes from a couple of GOP Senators displeased with the US President dragged the currency down at the start of the session, but hints that Trump could pick Taylor as his next Fed Chief spurred gains. US flash services and manufacturing PMI readings from Markit also beat expectations while the Richmond manufacturing index disappointed. Durable goods orders data and new home sales are lined up next.

EUR

The euro was mostly stronger for the day as traders are starting to price in upbeat expectations for the ECB decision. PMI readings from Germany and France came in better than expected, with only the region's flash services PMI missing the mark. German Ifo business climate data is due next and no change from the 115.2 figure is eyed.

GBP

The pound was mostly weaker against its counterparts as traders focused on Brexit updates while there were no major reports out of the UK economy. Today has the preliminary GDP reading due and another 0.3% growth figure is expected, but downbeat results could undermine confidence that the UK can stay resilient throughout Brexit.

CHF

The franc held steady against most of its peers since there were no major reports out of the Swiss economy. Today has the UBS consumption indicator due and a gain from the earlier 1.53 figure could spur franc strength. The Credit Suisse Economic Expectations index is also lined up and an improvement over the earlier 28.0 reading could also provide a boost.

JPY

The yen was still in a weak spot against most of its counterparts while retracing from its drop against others. Japan's flash manufacturing PMI was weaker than expected as it fell from 52.9 to 52.5 instead of improving to 53.1. There are no reports due from Japan today so risk sentiment could stay in play or the currency could take its cue from bond yields.

Commodity Currencies (AUD, NZD, CAD)

The Aussie tumbled sharply upon seeing downbeat CPI readings, with the headline figure at 0.6% versus 0.8% and the core reading at 0.4% versus 0.5%. Canada's monetary policy statement is due next and no rate changes are eyed. Instead traders are likely reading between the lines to gauge if another hike is in the cards before the end of the year. New Zealand's trade deficit is due in the next Asian session and a smaller deficit of 900 million NZD is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 26, 2017)

USD

The US dollar was mostly supported by stronger than expected housing data, along with strong contributions from durable goods orders. However, uncertainties surrounding the Trump tax plan and the next Fed head are keeping the dollar's gains in check. Only medium-tier reports like the goods trde balance, preliminary wholesale inventories, and pending home sales are due next.

EUR

The euro was able to hold its ground against most of its peers, except against the British pound. German Ifo business climate data was stronger than expected as the reading rose from 115.3 to 116.7 instead of dipping to 115.2. Traders are sitting tight ahead of today's ECB decision as the central bank is widely expected to announce the size of its taper.

GBP

The pound got a strong boost from better than expected Q3 preliminary GDP. The economy expanded 0.4% during the quarter, a notch higher than the estimated and previous 0.3% growth figure. Only the CBI realized sales index is due today and a fall from 42 to 14 is expected, possibly hinting at weaker business conditions down the line.

CHF

The franc regained ground against most of its rivals, except for the British pound. Data from Switzerland showed improvements as the UBS consumption indicator rose from 1.50 to 1.56 while the Credit Suisse Economic Expectations index climbed from 28.0 to 32.0. There are no reports due from Switzerland today so the currency could be sensitive to the ECB decision and its impact on EUR/CHF.

JPY

The yen recovered against most of its peers, except the pound. There were no major reports out of Japan but uncertainties looming over the dollar rendered the yen as the preferred safe-haven currency for the day. There are still no major reports due today so traders could be sensitive to market sentiment in trading yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was dragged lower by the BOC's less hawkish tone during their rate statement. The central bank kept rates unchanged at 1.00% as expected but mentioned inflation concerns and the Loonie strength one too many times even in the presser. BOC head Poloz and policymaker Wilkins also noted the uncertainties stemming from NAFTA renegotiations. New Zealand printed a larger than expected trade deficit at 1143 million NZD versus the estimated 900 million NZD shortfall.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 27, 2017)

USD

The dollar has gotten a boost from news that the House passed a budget resolution to allow the tax bill to clear Senate without achieving a supermajority. US advance GDP data for Q3 is due next and hopes are running high after the durable goods orders report suggested a stronger contribution from the business sector for the period. Analysts are expecting to see a 2.6% growth figure, slower than the earlier 3.1% expansion. News on Trump's Fed Chair pick could also lead to big moves for the dollar.

EUR

The euro suffered a strong selloff during the ECB decision, which was seen as a dovish taper. The ECB plans to maintain its 60 billion EUR monthly asset purchase program until the end of the year then tapering it down to 30 billion EUR per month from January to September 2018 or beyond if necessary. Draghi admitted that the decision was not unanimous and that inflation has not been encouraging but expressed optimism that growth could continue. Data on German import prices is due next.

GBP

The pound commiserated with the euro after the ECB announcement as this also sparked concerns that the upcoming BOE decision might not be so hawkish. Besides, the CBI realized sales index posted a surprise tumble from 42 to -36 versus the estimated dip to 14. This signals that business conditions aren't looking too good, following the disappointment in the CBI industrial order expectations index earlier in the week. There are no reports due from the UK economy today.

CHF

The franc gave up ground to some of its peers as EUR/CHF did not rally strongly after the ECB decision, keeping traders wary of future intervention by the SNB. There were no reports from Switzerland yesterday and none are due today so market sentiment could push franc pairs around.

JPY

The yen lost ground to the dollar but managed to advance against most of its rivals. Data from Japan has been slightly better than expected, with the Tokyo core CPI beating expectations with a 0.6% uptick versus the projected 0.5% gain. The national core CPI came in at 0.7% as expected. There are no other reports lined up from Japan so the yen might take its cue from bond yields, sentiment, and dollar demand.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly weaker, except against the euro, as the gang is not likely to see any rate hikes from their respective central banks anytime soon. In Australia, quarterly PPI disappointed with a meager 0.2% uptick versus the estimated 0.4% gain. There are no other reports due from the comdoll economies next so market sentiment could take control.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 6, 2017)

USD

The US dollar dipped upon seeing downbeat NFP results but recovered before the week closed. Employment rose by 261K in October versus the estimated 312K gain, but the earlier figure was upgraded from -33K to +18K. The unemployment rate fell from 4.2% to 4.1% while the ISM non-manufacturing PMI improved to 60.1. There are no major reports due from the US today but FOMC member Dudley has a speech lined up.

EUR

The euro gave back most of its recent gains as traders likely booked profits during the market holidays. German factory orders data is due next and a 1.0% decline is eyed, following the earlier 3.6% increase. The Sentix investor confidence index is also lined up and an improvement from 29.7 to 31.2 is expected.

GBP

The pound was in recovery mode on Friday when the services PMI beat expectations. The reading rose from 53.6 to 55.6 versus the consensus at 53.3. BOE Governor Carney's remarks on how Brexit could limit the central bank's ability to cut rates also kept the currency supported. There are no major reports due from the UK economy today.

CHF

The franc had a mixed run as the lack of top-tier data from Switzerland left the currency sensitive to country-specific events and market sentiment. Swiss CPI is due today and analysts are expecting to see a 0.1% uptick in price levels, following the earlier 0.2% gain.

JPY

The yen also had a mixed run as it reacted mostly to currency-specific factors. Japanese banks were closed on Friday for the holiday and there are no major reports due from Japan today. This signals that the currency could take its cue from sentiment and its counterparts once more.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was one of the weakest performers at the end of the week as it continued sliding against most of its peers. Australian retail sales came in flat instead of posting the estimated 0.4% uptick. In Canada, employment rose by 35.3K versus the estimated 15.3K increase and earlier 10K gain. New Zealand's quarterly inflation expectations fell from 2.1% to 2.0% and Canada's Ivey PMI is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 07, 2017)

USD

The dollar was off to a good start but gave up its gains during the latter part of the London session and throughout the US session after FOMC member Dudley confirmed his retirement plans. He is one of the more hawkish members of the Fed so the change could weigh on rate hike odds next year. Newly-appointed member Quarles is set to give a testimony today and traders are eager to find out about his policy biases. Fed Chair Yellen also has a speech due and US consumer credit data will be released.

EUR

The euro was in a weak spot against most of its peers as final services PMI readings turned out weaker than expected. On a less downbeat note, the Sentix investor confidence index improved from 29.7 to 34.0 versus the consensus at 31.2. Euro zone retail PMI and retail sales are due today, after Governor Draghi gives a testimony that is expected to shed more light on future central bank action. German industrial production data is also due.

GBP

The pound was one of the better-performing currencies for the day even though there were no major UK reports released. Earlier today, the UK BRC retail sales monitor showed a 1.0% slide versus the previous 1.9% gain, signaling weakness in domestic spending owing to inflation. The Halifax HPI is due next and a 0.2% uptick is eyed, slower than the earlier 0.8% gain.

CHF

The franc had a mixed run as the currency simply reacted to its counterparts. Swiss CPI came in line with expectations of a 0.1% uptick and traders are looking to SNB head Jordan's testimony next. SNB foreign currency reserves data is also due and a huge gain over the previous 724 billion CHF level could signal intervention.

JPY

The yen weakened to most of its peers, except against the euro and the dollar. BOJ minutes and Governor Kuroda's speech sent dovish vibes on a continuation of the central bank's easy monetary policy. Earlier today, Japan's average cash earnings figure came in better than expected at 0.9% versus 0.6% and the earlier 0.7% figure.

Commodity Currencies (AUD, NZD, CAD)

The Loonie drew a bit more support from rising crude oil prices amid the political purge in Saudi Arabia. Data also turned out better than expected as the Ivey PMI rose from 59.6 to 63.8 versus the consensus at 60.2. The RBA decision is coming up next and no changes to the 1.50% interest rates are eyed but traders are keen to find out if there was any shift in the central bank's bias. BOC Governor Poloz has a speech coming up and New Zealand will have its GDT auction next.

By Kate Curtis from Trader's Way