Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Dec 20, 2017)

USD

The US dollar was advancing ahead of the tax bill vote as housing data turned out stronger than expected. Building permits dipped 1.4% but landed higher than expected at 1.30 million versus the 1.27 million forecast. The current account deficit also posted a smaller than expected shortfall. However, even after the House voted to approve the tax reform bill, reports that another vote will need to be made on account of procedural conflicts with Senate forced the currency back down. Only the existing home sales report is due from the US today.

EUR

The euro got a strong boost on hawkish remarks from a couple of ECB officials then by the announcement that Germany will release more bonds next year. This drove yields higher even in other euro zone nations, propping the shared currency higher. Data was actually weaker than expected as the German Ifo business climate index fell from 117.6 to 117.2 versus expectations of it remaining unchanged. German PPI and euro zone current account balance are due next.

GBP

The pound was in a weak spot despite the lack of economic data as traders appear to be reducing their exposure for the next round of Brexit talks. BOE Governor Carney has a speech lined up today and could also spark additional volatility for pound pairs.

CHF

The franc gave up ground to most of its peers as risk-taking was in play and the euro appeared the preferred safe-haven bet. There were no major reports out of Switzerland yesterday and none are due today, so market sentiment and currency-specific factors could come into play.

JPY

The yen was also in a weak spot leading up to the BOJ decision later this week. There has been talk of a "reversal rate" by Governor Kuroda, prompting speculations that the central bank might also start unwinding stimulus at some point. Still, US bond yields have kept a lid on yen gains so far.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent gains on profit-taking and a few road bumps. New Zealand reported a 3.9% drop in dairy prices during the latest GDT auction while its current account and trade balance fell short of estimates. EIA crude oil inventories are due next, after the API reported another larger than expected draw. New Zealand quarterly GDP is also due.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 21, 2017)

USD

The dollar has been on strong footing as the focus was on the tax bill vote, which managed to clear its way through even with a few road bumps. President Trump could sign the bill into law anytime soon, which would provide a strong boost to business activity and overall growth in the coming months. Initial jobless claims and the final GDP reading are due next.

EUR

The euro struggled to hold on to its recent gains, although it did manage to draw support from news that Germany will offer more bonds next year. This drove yields in the euro region higher, bolstering the shared currency as well. There are no reports due from the euro zone today.

GBP

The pound was mostly moving sideways as the lack of top-tier data and unease ahead of more Brexit talks kept gains in check. UK public sector net borrowing data is due today and a rise to 8.3 billion GBP is eyed.

CHF

The franc was still in a weak spot but managed to regain a bit of ground when the SNB Quarterly Bulletin was released. Today has the trade balance due and analysts expect a larger surplus of 2.88 billion CHF from the earlier 2.33 billion CHF figure.

JPY

The yen lost ground to most of its peers after the BOJ statement as the central bank simply sat on its hands and kept policy unchanged. There was not much hints on any unwinding of stimulus, dashing hopes of a "reversal rate" talk from the BOJ head earlier on. From here, market sentiment and global bond yields could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to hold on to most of their gains as risk-taking was in play. New Zealand's GDP came in line with expectations of a 0.6% expansion while the earlier figure enjoyed an upgrade to a 1.0% growth figure. Canada's CPI and retail sales data are due next and weak figures could undermine odds of BOC hikes next year.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 22, 2017)

USD

The dollar had a mixed run as currency-specific factors were in play and US data also turned out mixed. The final GDP reading for Q3 was downgraded from 3.3% to 3.2% while initial jobless claims also printed weaker than expected results. On the flip side, the Philly Fed index jumped from 22.7 to 26.2 versus the 21.5 forecast. The core PCE price index, along with personal spending and income data, are due today.

EUR

The euro returned some of its recent wins as there were no major reports from the region. The consumer confidence index ticked up from 0 to 1 instead of holding steady to reflect stronger optimism. German GfK consumer climate and French consumer spending figures are due next, and strong results could reinforce hawkish ECB expectations.

GBP

The pound consolidated to the yen and dollar while giving up ground to the commodity currencies. UK public sector net borrowing came in slightly better than expected at 8.1 billion GBP versus 8.3 billion GBP. Today has the current account balance and final GDP reading on tap, although traders' attention seems to be fixed on Brexit updates.

CHF

The franc had a mixed run as it mostly reacted to currency-specific factors. Swiss trade balance was weaker than expected at a surplus of 2.63 billion CHF versus the consensus at 2.84 billion CHF but still larger than the earlier 2.45 billion CHF surplus. The KOF economic barometer is due next but no changes to the 110.3 figure are eyed.

JPY

The yen was in a weak spot after the BOJ decision as the central bank kept monetary policy unchanged. Although this was widely expected, traders seemed disappointed that Governor Kuroda didn't have much to say on the "reversal rate" or unwinding of stimulus. Risk-taking was also bearish for the lower-yielding currency, along with global bond yields.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the strongest performers of the day thanks to upbeat CPI and retail sales figures from Canada. Headline CPI rose 0.3% versus the 0.2% consensus while headline retail sales jumped 1.5% versus the 0.3% estimate, reviving hopes for more BOC hikes. Canada's monthly GDP is up next and a 0.2% expansion is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 27, 2017)

USD

The dollar has been on strong footing lately as Trump recently signed the tax bill into law. This would mean stronger business investment, consumer spending, and overall growth down the line, likely keeping tightening expectations in play. Only the CB consumer confidence index and the pending home sales report are due from the US today, and both are expected to show strong gains.

EUR

European banks have been closed on holidays for the first couple of days of the year and are set to reopen today. However, there are still no reports due and the next ones aren't out until Friday. These would be preliminary CPI readings from its top economies, set to shape expectations for the region's figures and monetary policy changes.

GBP

The pound was able to hold its ground against most of its counterparts when the EU issued its directives for Brexit, which included the two-year transition period. This could pave the way for easier adjustment, particularly for businesses in the UK. Banks will also reopen today and the UK High Street lending numbers are due.

CHF

The franc was unable to establish a clear direction as it mostly reacted to currency-specific factors. However, today has the UBS consumption indicator lined up, along with the Credit Suisse Economic Expectations report. Upbeat results could allow the franc to rally while a weak outlook could spur losses.

JPY

The yen gave up ground as bond yields favored the US dollar and other higher-yielders. Besides, the lack of tightening sentiment from the BOJ last week kept bulls disappointed. Japanese housing starts data are due today but sentiment could continue to push yen pairs around. Retail sales and industrial production are due in the next Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Aussie has been on a tear thanks to the RBA's less downbeat tune while the Loonie managed to recover its previous losses. Data from Canada has been mostly upbeat in the past week and crude oil remains supported. Crude oil inventories data due later in the week could push the Loonie around while Australia has its private sector credit data due.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 28, 2017)

USD

The US dollar continued to slide against its peers as data turned out mixed. Pending home sales posted a higher than expected 0.2% gain while the CB consumer confidence reading fell short of estimates. The index slipped from 128.6 to 122.1 versus the estimated 128.2 figure to reflect weaker optimism. Initial jobless claims, Chicago PMI, and preliminary wholesale inventories data are lined up next.

EUR

The euro advanced to the dollar but continued to slide against commodity currencies. There were no major reports out of the euro zone yesterday while today has the ECB Economic Bulletin due.

GBP

The pound ticked slightly higher to the dollar and yen but was also weaker against the comdolls. There were no reports out of the UK economy then while today has the High Street lending numbers due. A higher than expected read could be indicative of consumer confidence.

CHF

The franc had a mixed performance as it advanced to the dollar, consolidated against the yen and European currencies, then turned lower against the comdolls. The Swiss UBS consumption indicator ticked down from 1.68 to 1.67 and there are no major reports due today.

JPY

The yen reacted mostly to currency-specific factors on the lack of top-tier data earlier in the day. Freshly released are stronger than expected industrial production, which rose 0.6% versus 0.5%, and retail sales data, which posted a higher 2.2% gain versus the 1.1% consensus. BOJ core CPI is lined up next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were the big winners for the day, particularly the Loonie which got a boost from higher crude oil prices. There were no reports out of the Australian or New Zealand economy. The US EIA crude oil inventories data is due next and a draw of 3.5 million barrels is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 29, 2017)

USD

The dollar was in a weak spot for the most part of the day as risk appetite was in play. Positive sentiment in relation to the tax reform package appears to have faded and traders are focused on the event risks. Also, data has been mostly weaker than expected, casting doubts on tightening next year.

EUR

The euro had a mixed run as medium-tier data barely provided any direction. German preliminary CPI and Spanish flash CPI are up for release next and strong readings could reinforce tightening expectations. Keep in mind that the ECB is due to taper in January so traders are looking out for rate hike clues.

GBP

The pound was mostly weaker to the commodity currencies for yet another day. Data was weaker than expected as High Street lending came in at 39.5K versus the estimated 40.6K figure. There are no reports from the UK economy today.

CHF

The franc reacted to currency-specific factors on the lack of major data from Switzerland. Earlier in the week, the UBS consumption indicator dipped while the Credit Suisse economic expectations index advanced. There are no reports due from Switzerland today, so the franc could take its cue from euro zone data or overall sentiment.

JPY

The yen was still in a weak spot as risk-taking came into play. Japanese figures were actually better than expected, with preliminary industrial production and retail sales both beating expectations. The BOJ core CPI was also strong at 0.6% versus the 0.5% consensus.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were still in the green as rising commodity prices and generally positive risk sentiment buoyed the higher-yielding currencies. There were no major reports out of their economies recently, although Australia just printed a stronger than expected private sector credit figure.

By Kate Curtis from Trader's Way

 

[TradersWay]

Forex Major Currencies Outlook ( Jan 02, 2018)

USD
US banks were still closed for New Year's Day and are set to reopen today. Only the final manufacturing PMI reading is due, though, and no changes from the initial 55.0 figure are eyed. Other potential catalysts include updates on the tax reform package and overall market sentiment on the first trading day of the year.

EUR
The euro could also see a pickup in volatility as banks reopen today. Medium-tier reports namely Spanish and Italian manufacturing PMI, as well as the final manufacturing PMI readings from Germany and France, are up for release today.

GBP
The pound is starting the first trading day of 2018 with a bang as the UK manufacturing PMI is due. A dip from 58.2 to 58.0 is expected, though, and this would reflect a slower pace of industry expansion. The focus might remain on Brexit updates and how these could impact the economy in the coming months.

CHF
Swiss banks are still on a holiday today, which could mean either consolidation for the franc or sensitivity to currency-specific factors. The franc might also take its cue from medium-tier euro zone data.

JPY
The yen could continue to see further consolidation or risk flows as Japanese banks remain closed for the holiday. With that, there are no major reports lined up from Japan and the currency could respond more to global bond yields or sentiment.

Commodity Currencies (AUD, NZD, CAD)
The comdolls gave up some of their recent winnings towards the end of 2017 but could be off to a good start this year. However, Chinese PMI data released on December 31 printed a mixed picture, with a slight dip in manufacturing activity and an uptick in services. Caixin manufacturing PMI data is due today and a fall from 50.8 to 50.7 is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 03, 2018)

USD

The dollar was off to a shaky start as it simply picked up where it left off in 2017. Equities recorded a strong performance in anticipation of tax reform implementation, but the currency was more sensitive to policy biases and a fresh round of jitters from North Korea. The ISM manufacturing PMI is due today and analysts are expecting to see a dip from 58.2 to 58.1 to reflect a slower pace of expansion. Also due today are the FOMC meeting minutes for December, which might contain more insight on how the central bank could adjust policy in the year ahead.

EUR

The euro was able to sustain its lead on the heels of upbeat remarks from ECB member Coeure. Data was actually mostly weaker than expected as services PMI from the top economies fell short. Today has the Spanish unemployment change due and a 58.7K drop in joblessness is eyed. Germany is also set to print its jobs data and probably show a 13K decrease in unemployment.

GBP

The pound was also one of the best performers of the day, despite weaker than expected UK manufacturing PMI. The reading fell from 58.2 to 56.3 versus the estimated dip to 58.0 but it was the upbeat assessment of Markit that saved the day. Construction PMI is due today and a fall from 53.1 to 52.8 is expected.

CHF

The franc had a mixed run as it mostly reacted to currency-specific factors. Swiss banks were still closed for the holiday yesterday and will reopen today. The manufacturing PMI is due and a fall from 65.1 to 64.6 is eyed, reflecting a slower pace of industry expansion.

JPY

The yen took advantage of dollar weakness to chalk up a few more gains across the board. Traders also seem to be warming up to the idea that the BOJ might taper its QQE program later this year as well. Japanese banks are still closed for the holiday so there are no releases scheduled.

Commodity Currencies (AUD, NZD, CAD)

It was a rally and reverse day for the comdolls as they got hit by risk aversion in the earlier sessions then staged a bit of a rebound during the US hours. New Zealand reported a 2.2% rebound in dairy prices during the latest GDT auction while Canada had a stronger manufacturing PMI of 54.7 from the earlier 54.4 figure. China's Caixin manufacturing PMI also came in better than expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 04, 2018)

USD

The dollar was able to chalk up a winning day even after its shaky start this week as the FOMC minutes turned out less downbeat than expected. Several members confirmed that gradual rate hikes are in the cards, although many remained concerned about weaker inflation. Policymakers also suggested that strong jobs data could lift wages and price levels. The ISM manufacturing PMI turned out stronger than expected at 59.7, with an uptick in the prices component and a dip in the jobs figure. The ADP data is due next and a 191K increase in hiring is eyed, slightly higher than the earlier 190K gain.

EUR

The euro also took some hits as bond yields turned lower in anticipation of MiFID II. Data was stronger than expected, with both Germany and Spain printing better than expected jobs figures. Today has the final services PMIs from the top economies and positive revisions could be bullish for the shared currency.

GBP

The pound lost a bit of ground when the construction PMI also turned out weaker than expected. The reading fell from 53.1 to 52.2 instead of improving to 52.8. The services PMI is due today and an improvement from 53.8 to 54.1 is eyed. Net lending to individuals and mortgage approvals data are also lined up.

CHF

The franc was one of the weaker performers during the day as risk-taking during the latter trading sessions weighed on the currency. Swiss manufacturing PMI was actually better than expected as the reading ticked up from 65.1 to 65.2 instead of falling to 64.6. There are no reports due from the Swiss economy today so market sentiment could drive franc action.

JPY

The yen was off to a good start during the Asian and London sessions but wound up returning most of its gains to the dollar later on. Bond yields favored the US currency and led to a weaker yen as risk-taking continued. Japan's final manufacturing PMI was downgraded from 54.2 to 54.0.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was one of the strongest performers of the day while its peers followed closely behind. Crude oil staged another rally on another day of unrest in Iran and a larger than expected draw in API stockpiles. China reported a gain in its Caixin services PMI from 51.9 to 53.9 versus the 51.8 consensus. EIA crude oil inventories and Canada's underlying inflation figures are due.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 05, 2018)

USD

The dollar barely drew any support from upbeat leading jobs indicators. The Challenger job cuts report printed a 3.6% drop in layoffs, bringing the annual total of job cuts down to its lowest level since 1990. The ADP reading also beat expectations with a 250K gain versus the 191K figure, but the earlier reading was downgraded from 190K to 185K. The NFP report is due today and analysts expect an increase of 190K, slower than the earlier 228K gain.

EUR

The euro continued to advance against most of its peers on the heels of hawkish ECB rhetoric earlier in the week and a couple of upside surprises in medium-tier data. German retail sales, French preliminary CPI, and the region's flash CPI readings are up for release today. Another round of upbeat results could continue to stoke expectations of ECB rate hikes later this year, following their taper plans this month.

GBP

The pound wasn't too far behind as the UK currency was able to benefit from better than expected services PMI. The reading rose from 53.8 to 54.2, a notch higher than the 54.1 consensus. There are no major reports due from the UK today.

CHF

The franc was mostly weaker against its higher-yielding peers as risk-taking was in play. There were no reports out of the Swiss economy in the latest sessions and there are no reports due today, which suggests that franc pairs could keep moving in line with market sentiment or currency-specific factors.

JPY

The yen was also one of the weaker performers as risk-taking took its toll on the lower-yielding currency. Japan's final manufacturing PMI was downgraded from 54.2 to 54.0 to indicate a slower pace of industry growth. There are no reports due from Japan today, so the yen could be more sensitive to bond yields and dollar price action.

Commodity Currencies (AUD, NZD, CAD)

The Loonie got a boost from better than expected underlying inflation figures from Canada. Both the RMPI and IPPI posted strong upside surprises, signaling positive inflationary pressures down the line and shoring up BOC hike hopes. Earlier today, Australia printed a weaker than expected trade balance with a surprise deficit of 0.63 billion AUD instead of the estimated 0.55 billion AUD surplus.

By Kate Curtis from Trader's Way