Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Jan 24, 2018)

USD

The US dollar was the weakest currency for yet another day as risk-taking and weak data dragged it down. Safe-haven flows also moved to the Japanese yen and Swiss franc instead. The Richmond manufacturing index slumped from 20 to 14 versus the consensus at 19. Flash manufacturing and services PMI are due next, along with existing home sales data.

EUR

The euro had a mixed run as it advanced to the dollar but weakened to the pound and comdolls. Data turned out stronger than expected as the ZEW readings from both Germany and the entire region beat estimates. Flash manufacturing and services PMIs are due next, and small dips are eyed. Updates on the German coalition talks should continue to influence the shared currency as well.

GBP

The pound was able to hold its ground on stronger than expected public sector net borrowing and CBI industrial order expectations data. UK jobs data is due next and a lower claimant count change of 2.3K is eyed compared to the previous month's 5.9K increase in joblessness. The average earnings index could hold steady at 2.5% while the unemployment rate could stay unchanged at 4.3%.

CHF

The franc took its share of safe-haven gains despite the lack of top-tier data from Swizterland. There are still major reports due from the Swiss economy today, so market sentiment could push franc pairs around.

JPY

The yen gained ground after the BOJ was slightly more hawkish than expected. Still, the central bank decided to keep rates and bond purchases at current levels. Apart from that, the lower-yielding Japanese currency took advantage of dollar weakness. The flash manufacturing PMI is due next.

Commodity Currencies (AUD, NZD, CAD)

The higher-yielding comdolls once again gained ground on risk rallies, with the Loonie drawing additional support from NAFTA developments. Key members of the negotiating groups acknowledged that some progress is being made, although Trump still seems prepared to walk away without a deal. EIA crude oil inventories data and New Zealand's quarterly CPI report are lined up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 25, 2018)

USD

The dollar suffered yet another selloff after Treasury Secretary Mnuchin remarked in the Davos summit that a weaker dollar is good for trade. US data such as services PMI and existing home sales also turned out mostly weaker than expected, keeping traders doubtful about the Fed's tightening plans this year. New home sales, initial jobless claims, and the goods trade balance are up for release today.

EUR

The euro continued to rake in gains despite fears of jawboning from ECB head Draghi during the policy statement later today. A handful of the PMI readings from Germany and France still posted upside surprises, keeping traders positive about the improvements in the region lasting for much longer. No actual rate changes are expected today but strong remarks against currency appreciation could mean losses for the shared currency.

GBP

The pound was the strongest currency for the day thanks mostly to Brexit developments and positive jobs figures. The claimant count was weaker than expected at 8.6K versus 2.3K, though, while the previous reading was revised to show a larger increase in joblessness. The average earnings index held steady at 2.5% as expected while the unemployment rate was also unchanged at 4.3%.

CHF

The franc also caught a bid in recent sessions as it took over the safe-haven flows from the yen and dollar. There were no major reports out of the Swiss economy yesterday while today has an empty schedule as well, leaving market sentiment to stay in play.

JPY

The Japanese yen had a mixed round as it gave up ground to the pound but managed to outpace its other rivals, particularly the dollar. Japan's flash manufacturing PMI improved from 54.0 to 54.4 versus the consensus at 54.3. Japanese CPI readings are up for release in tomorrow's Asian session and this could impact BOJ tapering expectations.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness but were slightly weaker to the yen and especially against the European currencies. New Zealand's quarterly CPI came in weaker than expected with a meager 0.1% uptick versus the estimated 0.4% gain or the earlier 0.5% increase. Canadian retail sales data are lined up next and the headline figure could show a 0.7% gain while the core reading might be up by another 0.8%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 26, 2018)

USD

The US dollar dollar drew some support in the New York session as US President Trump said that he sees the currency getting stronger and stronger. He also said that Treasury Secretary Mnuchin's remarks on a weaker dollar being good for trade as taken out of context. Data turned out mixed as the initial jobless claims rose from 216K to 233K but was better than the estimated 239K figure. New home sales sank from a downgraded 689K figure to 652K versus the estimated drop to 627K. Advance GDP data is due next and a 3.0% growth figure is eyed.

EUR

Volatility picked up for the euro after the ECB statement as the central bank kept policy unchanged as expected but Draghi had a few more insights to share. He cited that risks remain balanced and that uncertainty is stemming from possible changes in US policy. He also explained that the central bank is not targeting exchange rates. There are no major reports due from the euro zone today.

GBP

The pound was able to score some gains against its peers despite the lack of top-tier UK data. High Street lending sank from 39K to 36.1K while the CBI realized sales index fell from 20 to 12. The UK preliminary GDP reading is due today and analysts expect to see another 0.4% expansion for Q4 2017.

CHF

The franc continued its advance even though SNB head Jordan warned that they could intervene in the forex market to curb currency strength if necessary. So far it looks like the franc is still taking some of the safe-haven flows from the dollar. There were no reports out of the Swiss economy then and none are due today, so market sentiment could push franc pairs around.

JPY

The yen regained some ground after the release of the CPI and BOJ minutes. The national CPI held steady at 0.9% as expected but the Tokyo core CPI fell from 0.8% to 0.7%. Meanwhile the BOJ minutes didn't contain any surprises and even had a few upbeat remarks. Dollar demand and sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to hold their ground as risk-taking was in play but gave up some ground to the dollar when it surged. Canadian retail sales turned out mixed as the headline figure came in at 0.2% while the core figure showed a 1.6% gain versus the 0.8% consensus. Canada's CPI reports are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook ( Jan 29, 2018)

USD

The dollar regained some ground towards the end of the previous week despite weaker than expected GDP. The advance reading for Q4 2017 came in at 2.6% versus the estimated 3.0% expansion. Goods trade balance also disappointed but durable goods orders and preliminary wholesale inventories beat expectations. Today has the core PCE spending and personal spending and income data due.

EUR

The euro gave up some more ground towards the end of the previous week as a few more officials remarked on the currency's strength. In particular ECB member Villeroy remarked that currency volatility has been a source of uncertainty. Only the German import prices report is due today while the rest of the week has mostly preliminary CPI and GDP data.

GBP

The pound was one of the strongest currencies ending the week as progress on the Brexit transition plans and stronger than expected preliminary GDP of 0.5% lifted the currency. Medium-tier reports such as net lending to individuals, mortgage approvals, and the BRC price shop index are lined up over the next few days before the release of UK manufacturing and construction PMI data later on.

CHF

The franc was able to hold on to its wins as the currency shrugged off intervention threats from SNB head Jordan. Dollar weakness also drove the lower-yielding franc higher as a safe-haven alternative. There are no reports due from Switzerland today so sentiment could push franc pairs around.

JPY

The yen regained some ground as the dollar resumed its slide towards the end of the week. Japan has its household spending, retail sales, and the unemployment rate due in the next Asian session. Strong data could reinforce calls for BOJ tapering, although market sentiment would likely remain the driver for yen price action.

Commodity Currencies (AUD, NZD, CAD)

Canada's CPI reports showed some improvement, keeping Loonie traders hopeful for another BOC hike soon. Baker Hughes reported an increase in oil rig counts, though, and this could mean more output and downside pressure on the commodity. New Zealand has its trade balance due in the next Asian session and a smaller deficit is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 30, 2018)

USD

The US dollar staged a decent recovery during the New York session on revived expectations of Fed tightening. This was spurred by remarks from several central bank officials highlighting the shift to tightening mode across the globe. Economic data turned out mostly upbeat, with the core PCE price index rising from 0.1% to 0.2% and the personal income figure up by 0.4% versus the 0.3% forecast. Personal spending, however, fell short at 0.4% versus the 0.5% consensus. The CB consumer confidence index is due today.

EUR

The euro weakened against most of its counterparts on risk-off vibes for the most part of the European session and on remarks from an ECB official highlighting the shift to global tightening. German import prices came in line with estimates of a 0.3% uptick. German preliminary CPI, French consumer spending, Spanish flash GDP, and the region's flash GDP are all lined up today.

GBP

The pound was one of the weaker performers as infighting in PM May's party ahead of the announcement on the EU's negotiating stance in the Brexit transition. There were no reports out of the UK economy then while today has net lending to individuals and mortgage approvals data on tap.

CHF

The franc took advantage of risk-off flows during the European session as the euro was also in a weak spot. There were no reports out of the Swiss economy then while today has the trade balance and KOF economic barometer on the docket. A smaller surplus of 2.54 billion CHF is eyed while the KOF reading could dip from 111.3 to 110.9.

JPY

The yen struggled to hold on to its recent gains as some of the risk-off flows returned to the dollar. Japanese data also turned out mostly weaker than expected as both household spending and unemployment rate missed forecasts, although the latter was due to higher labor force participation. Retail sales beat expectations with a 3.6% gain versus the estimated 2.1% increase.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up some ground to the dollar but stayed resilient to the European currencies. In Australia, the NAB business confidence index improved from 7 to 11 while New Zealand's trade balance switched to a surplus of 640 million NZD versus the estimated 125 million NZD shortfall on stronger exports. There are no reports due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 31, 2018)

USD

The US dollar rallied and reversed on profit-taking towards the end of the month and ahead of the State of the Union address and FOMC statement. No actual policy changes are expected but traders will be keeping their eyes and ears peeled for clues on the pace of tightening this year. The ADP non-farm employment change figure is also due and analysts expect to see a 186K gain in hiring.

EUR

The euro had a mixed run as data also came in mixed. French flash GDP up by 0.6% versus the estimated 0.5% expansion. German preliminary CPI turned out below expectations with a 0.7% drop, though, lower than the estimated 0.5% dip. The region's flash GDP came in line with estimates of a 0.6% growth figure. German retail sales and preliminary CPI readings are due today and stronger than expected results could revive ECB hike forecasts.

GBP

The pound was able to regain ground on BOE Governor Carney's optimistic remarks. In his speech, he said that inflation could stay above target longer as the pass-through effects of a weaker pound are just being seen. He also cited that wages are up, the labor market is tight, and that productivity and investment could still pick up. There are no major reports from the UK today.

CHF

The franc continued to rake in gains against its peers on risk-off flows and hesitation to buy the dollar. The Swiss trade balance came in stronger than expected with a 2.63 billion CHF surplus versus the estimated 2.54 billion CHF figure. However, the KOF economic barometer disappointed with a fall from 111.4 to 106.9. The UBS consumption indicator and Credit Suisse economic expectations index are lined up today.

JPY

The yen also managed to chalk up some wins on risk-off flows and dollar weakness. Japan's preliminary industrial production report turned out stronger than expected with a 2.7% gain versus the estimated 1.5% increase and the earlier 0.5% uptick. Japanese consumer confidence index and housing starts are lined up next.

Commodity Currencies (AUD, NZD, CAD)

The Loonie managed to stand its ground despite another down day for oil prices due to the API buildup of 3.2 million barrels. In Australia, the headline CPI was slightly weaker than expected at 0.6% versus 0.7% while the trimmed mean CPI came in at 0.4% versus 0.5%. Canadian monthly GDP and underlying inflation data are due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 01, 2018)

USD

The FOMC statement led to a bit of a boost for the dollar on stronger inflation expectations and the addition of the word "further" in projecting more tightening moves. Data also turned out mostly upbeat, with the ADP beating expectations for January even as the previous reading was downgraded. ISM manufacturing PMI is due today and a fall from 59.7 to 58.7 is expected.

EUR

The euro held its ground against most of its peers as CPI figures came in line with expectations. The headline estimate dipped from 1.4% to 1.3% while the core reading rose to 1.0%. Final manufacturing PMI readings are due from the region's top economies today.

GBP

The pound gave up some ground earlier in the day on reports that the EU might reject a trade proposal that would have little barriers for the UK in accessing the shared market. UK manufacturing PMI is due today and an uptick from 56.3 to 56.5 is eyed, with strong data likely boosting sterling once more.

CHF

The franc had a mixed run but was mostly in the green as it advanced to the yen, dollar, and commodity currencies. Swiss reports were weak, though, with both the UBS consumption indicator and Credit Suisse economic expectations index sliding lower. Swiss retail sales, manufacturing PMI, and SECO consumer climate figures are due next.

JPY

The yen was in a weak spot as risk appetite improved for the most part of the day and the dollar took back its share of safe-haven gains. Japan's final manufacturing PMI enjoyed an upgrade from 54.4 to 54.8 to reflect a stronger pace of expansion than initially reported. The bond auction is due next.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were in rally and reverse mode, particularly against the dollar. Data from Australia was mixed, with the CPI figures showing slight dips but business indicators stayed strong. China's manufacturing PMI also dipped slightly based on official data but the Caixin figure was unchanged. Crude oil managed to hold its ground despite the surprise build in EIA stockpiles as the OPEC showed strong compliance to its output deal.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 02, 2018)

USD

The dollar was in a weak spot once more and failed to draw a boost from upbeat economic data. The ISM manufacturing PMI fell from 59.7 to 59.1 to reflect a slower pace of industry growth, but the reading was better than the 58.7 consensus. However, the jobs component posted a sharp decline, leading to downbeat expectations for the NFP. Analysts are expecting to see an increase of 181K in hiring, slightly stronger than the earlier 148K gain.

EUR

The euro was one of the top performers of the day even though medium-tier data was mixed. Rising bond yields and a stronger performance among European equities were likely propping the shared currency higher. There were also a few hawkish remarks from ECB officials calling the end of their QE program within the year. Spanish unemployment change, euro zone PPI, and Spanish preliminary CPI are due today.

GBP

UK manufacturing PMI came in weaker than expected as it slid from 56.2 to 55.3 versus the 56.5 forecast. Components revealed that the main cause for the drop was weaker output, even as prices and export levels rose. The construction PMI is due today and a dip from 52.2 to 52.0 is eyed, indicating a slower pace of industry expansion as well.

CHF

The franc was also one of the strongest gainers for the day as it took advantage of dollar and yen weakness. Apart from that, the Swiss SECO consumer climate improved from -2 to +5, outpacing the consensus at +2. Retail sales, however, came in weaker than expected with a 0.6% gain versus the estimated 1.5% increase.

JPY

The yen also weakened to most of its peers despite strong data from Japan. The BOJ didn't make any changes to its latest round of JGB purchases, underscoring their commitment to ultra-easy monetary policy. There are no other reports due from Japan so yen pairs could take their cues from bond price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar and yen weakness but were no match to the strength of European currencies. Data from Australia was mixed as building approvals tanked 20% while import prices posted a 2.0% quarterly gain. Earlier today, PPI also beat expectations at 0.6% versus the 0.4% consensus. There are no other reports due from the comdoll economies.

By Kate Curtis from Trader's Way

 

[TradersWay]

Forex Major Currencies Outlook (Feb 5, 2018)

USD
The US dollar staged a strong rally during the NFP release as the results came in better than expected. The economy added 200K jobs in January versus the estimated 181K increase while the December figure was upgraded to 160K. The unemployment rate held steady at 4.1% as expected while the average hourly earnings figure beat expectations with a 0.3% increase versus the estimated 0.2% uptick. The previous reading also enjoyed a positive revision to 0.4%. The UoM index also enjoyed an upgrade. The ISM non-manufacturing PMI is due today but might not have such a huge impact on the dollar since the jobs report was already released.

EUR
The euro gave up some ground to the dollar but managed to stay strong against the rest of its counterparts. Data from the region turned out mostly weaker than expected, though, with Spain reporting a larger 63.7K increase in unemployment versus the estimated 50.3K figure. Euro zone PPI also came in at 0.2% versus the estimated 0.3% increase. Euro zone retail sales and final services PMI readings are due today.

GBP
The pound struggled to hold on to some of its recent gains when the construction PMI came in weaker than expected. The reading fell from 52.2 to 50.2 to indicate a slower pace of industry growth. The services PMI is due today and a dip from 54.2 to 54.1 is eyed, although another disappointing read could mean more losses for the pound.

CHF
The franc was nearly nonstop in its rallies until the end of the week as risk-off vibes remained in the markets. There were no reports out of Switzerland then and none are due today, so market sentiment could remain the driver of franc price action.

JPY
The yen was in a weak spot for the most part of the day before recovering on profit-taking. The Japanese currency did gap higher at the start of the week to signal that traders were also cashing in on last week's moves. There are no major reports due from Japan, though, so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)
The comdolls gave up ground to the dollar and most of their counterparts mostly on profit-taking and a pullback in risk appetite. Medium-tier data from Australia like the AIG services index and MI inflation expectations figure showed improvements. China's Caixin services PMI is lined up next and a dip from 53.9 to 53.6 is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 06, 2018)

USD

The dollar was able to draw a bit of support from risk-off flows even as equities plummeted. The VIX posted one of its strongest single-day jumps while indices erased most of their gains for the year in what several analysts called a long-overdue pullback. US data was stronger than expected as the ISM non-manufacturing PMI climbed from 55.9 to 59.9. Only the trade balance and IBD/TIPP economic optimism index are due next.

EUR

The euro managed to gain a bit of support from Draghi's optimistic remarks but still caved to the dollar and yen. Draghi acknowledged that economic growth has been broad-based in the region and that they are more confident about inflation. Still, he cautioned that it's too early to call victory just yet. German factory orders and euro zone retail PMI are lined up next.

GBP

The pound struggled to stay afloat as it was bogged down by downbeat services PMI. The reading slumped from 54.2 to 53.0 versus the 54.1 consensus to show a weaker pace of industry expansion just like in the manufacturing and construction sectors. There are no major reports from the UK today so traders could react to Brexit-related headlines or price in Super Thursday expectations.

CHF

The franc was also among the top contenders as it raked in most of the safe-haven flows. There were no reports out of the Swiss economy then and there are none due today, which means that sentiment could keep pushing franc pairs around.

JPY

The yen was the strongest performer thanks to the sharp tumble among higher-yielding assets on a pickup in market fear. There were no reports out of Japan then and none are due today, so sentiment could still be the primary driver of yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were greatest hit by the slump in risk appetite as traders dumped riskier holdings. Gold managed to chalk up some gains while crude oil slipped. Earlier today, Australia reported weaker retail sales and trade balance data. New Zealand will release its quarterly jobs report next and might print a meager 0.2% uptick in hiring.

By Kate Curtis from Trader's Way