Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Dec 4, 2015)

USD

The US dollar had a late rally during the New York trading session as Fed Chairperson Yellen reiterated her hawkish bias. Data from the US economy fell below expectations, as the ISM non-manufacturing PMI dropped from 59.1 to 55.9 instead of just dipping to 58.1. Still, analysts are expecting to see an upbeat NFP reading due to the pickup in employment indices and the stronger than expected ADP report.

EUR

The euro staged a strong climb following the ECB interest rate statement even though the central bank announced additional stimulus measures. Policymakers lowered the deposit rate to -0.30% and announced an extension of their QE program, bringing the total up to 1.5 trillion EUR. Still, market watchers were disappointed that the actual size of monthly purchases were maintained. German factory orders data is due next and a 1.3% rebound is eyed.

GBP

The pound also made a strong climb in recent trading sessions, thanks to stronger than expected UK services PMI. Traders had been bracing themselves for another disappointment, as the manufacturing and construction sectors failed to meet expectations. The actual figure rose from 54.9 to 55.9, outpacing the consensus at 55.1. Only the Halifax HPI is due today.

CHF

The franc enjoyed a bit of a relief rally when the ECB refrained from easing too much. This lowered the odds of SNB intervention, allowing traders to lighten up on their short franc positions. There were no reports out of the Swiss economy then and the CPI report is due today, with a flat reading expected.

JPY

The yen was all over the place as it mostly reacted to risk sentiment and currency-specific events. There were no reports out of Japan yesterday while today has the average cash earnings index lined up. A pickup in wages of around 0.4% would be in line with expectations, possibly keeping the yen afloat. Japanese consumer confidence data is also up for release.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were slightly weaker against the dollar and returned their wins to the European currencies, as Australia printed a downbeat trade balance. The deficit widened to 3.31 billion AUD because of a sharp 3% drop in exports. Retail sales data is up next and a 0.4% uptick is expected. In Canada, the trade balance and jobs figures are up for release.


By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 7, 2015)

USD

The US dollar managed to make a quick rebound on Friday, thanks to upbeat jobs data. The US economy added 211K jobs in November, higher than the projected 201K gain. Meanwhile, the previous report enjoyed an upgrade from 271K to 298K and the unemployment rate held steady at 5.0%. Average hourly earnings rose 0.2% as expected. Only the labor market conditions index is due today.

EUR

The euro returned some of its recent wins at the end of the week but remained around its current trading levels against some of its peers. Data from the euro zone came in stronger than expected then, as German factory orders rose 1.8% versus the projected 1.3% increase. For today, the German industrial production report and euro zone Sentix investor confidence index is due.

GBP

The pound struggled to hold its ground on Friday since there were no major reports to give it any support. A testimony by BOE Governor Carney is lined up today and this should set the tone for the BOE interest rate statement later on in the week. Dovish remarks could spur losses for the pound while reassuring comments could help it stay afloat.

CHF

The franc gave back some of its wins at the end of the week, possibly due to profit-taking. The Swiss CPI actually missed expectations and showed a 0.1% drop instead of posting a flat reading. Swiss foreign currency reserves data are due today and a significant gain could be indicative of SNB intervention.

JPY

The yen lost ground on risk appetite last Friday, as the upbeat jobs data from the US sparked demand for higher-yielding currencies. Data from Japan was actually better than expected, as the consumer confidence index rose from 41.5 to 42.6 while average cash earnings enjoyed a stronger than expected gain of 0.7%. Leading indicators and a speech by BOJ Governor Kuroda are lined up today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to keep rallying against the dollar on Friday, as risk appetite took hold of the financial markets. The OPEC refrained from cutting oil production and Canada printed a sharper than expected 35.7K drop in hiring, but the Loonie still moved sideways after the Ivey PMI jumped from 53.1 to 63.6. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 8, 2015)

USD

The US dollar was able to recover at the start of the week, thanks to the downturn in commodity prices and the return in risk aversion. There were no major reports out of the US economy, as it seems that market participants are just bracing themselves for a rate hike next week.

EUR

The euro returned some of its recent wins to the dollar as data from the region came in weak. Germany printed a 0.2% increase in industrial production, lower than the projected 0.8% gain, while the Sentix investor confidence index came up short of expectations. Only low-tier reports are due from the euro zone today.

GBP

The pound struggled to hold on to its gains as investors appear to be pricing in more downbeat remarks from the BOE later on this week. There were no reports out of the UK yesterday while today has the Halifax HPI and manufacturing production lined up. Weak data could set the tone for a cautious BOE statement and MPC minutes on Thursday.

CHF

The franc made its way back to the 1.0000 level against the dollar, but this area appears to be holding as support ahead of the SNB decision later this week. The Swiss central bank might announce intervention efforts or at least jawbone the currency since the ECB already ramped up their stimulus plan. The foreign currency reserves showed a bump up from 552B to 563B CHF.

JPY

The yen took advantage of the run in risk aversion to recover against its forex rivals but it was still no match to dollar strength. Traders are waiting on the release of Japan's current account balance and final GDP reading today, which might show a positive revision from -0.2% to +0.1%.

Commodity Currencies (AUD, NZD, CAD)

The comdolls got slammed in today's trading sessions, as WTI crude oil fell below $40/barrel and iron ore fell to record lows. There were no major reports out of the comdoll economies yesterday while today has the Australian NAB business confidence index and Chinese trade balance on tap. Canadian housing starts and building permits data are also due, along with a speech by BOC Governor Poloz.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 9, 2015)

USD

The US dollar was slightly weaker on the day, possibly due to the JOLTS job openings decline. The figure dropped from 5.53M to 5.38M instead of improving to the projected 5.59M reading. US crude oil inventories data is due today, but this could have a stronger impact on the Canadian dollar than the Greenback.

EUR

The euro enjoyed a return in bullish momentum following a day of consolidation after the ECB statement. Data from the region was actually weaker than expected, but it looks like traders are pricing in better economic performance later on since the ECB lowered deposit rates last week. Only the German trade balance is lined up today.

GBP

The pound was in a weak spot after the UK manufacturing production report showed a 0.4% decline, worse than the projected 0.1% drop. The Halifax HPI was also weaker than expected with a 0.1% drop instead of the expected 0.3% uptick.

CHF

The franc advanced against most of its peers, trailing the euro in today's trading sessions. There were no reports out of Switzerland yesterday and only the unemployment rate is due today. This could show a steady reading of 3.4%, which might support the franc ahead of the SNB decision later on.

JPY

The yen was a big winner during the risk-off environment, as its lower-yielding US dollar rival was weighed down by downbeat jobs indicators. Medium-tier data from Japan, namely the current account balance and Economy Watchers sentiment index, were weaker than expected but the final GDP reading was upgraded from -0.1% to 0.3%. Japanese core machinery orders data is due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still on weak footing, with the Loonie losing ground the most. BOC Governor Poloz mentioned in his latest testimony that the central bank has more policy tools to use more than zero interest rates, such as negative deposit rates or asset purchases. This kind of forward guidance drove the Loonie much lower, as oil prices didn't show any signs of bottoming out. Chinese CPI data is due and a rise from 1.3% to 1.4% is expected. The RBNZ decision is coming up and some are expecting a 0.25% cut.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 10, 2015)

USD

The US dollar had a mixed performance, as it gave up ground to the yen, euro, pound and Kiwi but managed to stay strong against its other rivals. There have been no major reports out of the US, leaving risk sentiment as one of the major drivers of price action. Today has the initial jobless claims and import prices data on tap.

EUR

The euro continued to advance against the dollar but was slightly weaker against its other counterparts. Data from the euro zone was still better than expected, with Germany reporting a larger than expected trade surplus of 20.8 billion EUR versus the projected 19.2 billion EUR surplus. French jobs data, CPI, and industrial production numbers are on tap for today and another round of upbeat numbers could spur more euro rallies.

GBP

The pound managed to stay afloat when the UK FPC upgraded their forecasts for the economy. Up ahead, the BOE interest rate statement and MPC minutes are on the docket and this might trigger more volatility for pound pairs. The central bank sounded dovish in their previous statement and might reiterate their cautious outlook this time.

CHF

The franc continued to trail the euro and advance against some of its forex counterparts, as risk aversion stayed in play. The Swiss jobless rate held steady at 3.4% as expected, which suggests that the SNB might not sound to dovish in their upcoming statement. Still, any downbeat remarks or currency jawboning now that the ECB has eased policy might be in the works.

JPY

The yen was the biggest winner in the risk aversion game, as improving Japanese fundamentals led the currency to be the more preferred safe-haven. Japanese core machinery orders jumped by 10.7% instead of falling by 1.5%, setting the tone for stronger manufacturing conditions. Japan's PPI is up for release today and a 3.8% decline is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took a break from their recent tumble when the US crude oil inventories report showed a drop in stockpiles, easing fears of an oversupply. The RBNZ decided to cut rates by 0.25% as expected but suggested that this might be the last of their rate cuts since they expect growth to pick up by next year. Australia's jobs report is due next and a 10K drop in hiring is eyed.


By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 11. 2015)

USD

Data from the US economy came in mixed today, as the initial jobless claims report posted a downside surprise of 282K in claimants while import prices indicated a smaller than expected 0.4% drop versus the projected 0.8% decline. For today, the retail sales report is up for release and the headline figure is slated to show a 0.2% gain while the core figure could show a 0.3% increase.

EUR

The euro managed to resume its climb in recent trading sessions, even though data from the region came in mixed. French non-farm payrolls and CPI numbers fell short of expectations but the industrial production report surprised to the upside. More medium-tier reports such as German final CPI and Italian industrial production data are due next.

GBP

The pound managed to breathe a sigh of relief after the BOE maintained its cautious stance instead of shifting to a more dovish one. The central bank kept rates and asset purchases at their current levels while one policymaker still voted to hike rates. UK construction output and consumer inflation expectations are due next.

CHF

The franc was also able to regain ground after the SNB interest rate decision since the central bank refrained from lowering deposit rates or intervening in the forex market for now. Still, SNB head Jordan reiterated that the franc is significantly overvalued and that they have enough policy options left. There are no reports due from the Swiss economy today.

JPY

The yen gave up some ground in recent trading sessions as commodity prices recovered and risk appetite had a bit of a rebound. Data from Japan came in mixed, as the BSI manufacturing index fell short of expectations but the PPI improved from -3.8% to -3.6%. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie got a break from its tumble when Australia printed an incredibly strong jobs report. The economy added 71.4K jobs in November instead of posting the projected 10K in losses. However, the reliability of the report has been questioned for quite some time so the gains weren't sustained. No other reports are due from the commodity currencies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 15, 2015)

USD

The US dollar had a mixed performance, although it was generally weaker against most of its peers with traders lightening up on their long positions ahead of the FOMC statement later on. No reports were released from the US yesterday while today has the Empire State manufacturing index lined up. A climb from -10.7 to -5.7 is eyed, but a drop could spur more dollar weakness. Also due are the CPI readings for November.

EUR

The euro continued to move sideways against the lower-yielding currencies but gave up ground to the commodity currencies. Data from the euro zone was stronger than expected, with industrial production up by 0.6% versus the projected 0.3% gain. ZEW economic sentiment figures are lined up for today, with the German reading expected to rise from 10.4 to 15.2.

GBP

The pound was in a weak spot against its peers, as traders are pricing in expectations for a downbeat jobs report on Wednesday. The UK Rightmove HPI indicated a 1.1% fall in prices, following the previous 1.3% slump. UK CPI is due today and a 0.1% increase in the headline figure is expected.

CHF

The franc continued to advance against the dollar, even though there were no major reports out of the Swiss economy. Today has the PPI on tap and a 0.1% uptick in producer prices is eyed.

JPY

The yen gave up some of its recent gains when the Tankan survey results beat expectations and brought risk appetite back to the table. The manufacturing component held steady at 12 instead of falling to 11 while the non-manufacturing component also held steady at 25. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a strong start as commodity prices bounced back at the start of the week. There were no reports out of the comdoll economies while today has the RBA minutes on tap. Also coming up is Canada's manufacturing sales data and New Zealand's dairy auction.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 16, 2015)

USD

The US dollar was able to bounce back against its peers when data came in mostly in line with expectations. The headline CPI stayed flat in November while the core version of the report showed a 0.2% uptick. The Empire State manufacturing index rose from -10.7 to -4.6, higher than the projected climb to -5.7 reading. For today, all eyes and ears are on the FOMC statement, as a rate hike might be accompanied by cautious remarks.

EUR

The euro was hit by a fresh round of selling pressure later in the day, even though the shared currency drew a bit of support from upbeat data. The German ZEW index rose from 10.4 to 16.1, higher than the estimated 15.2 reading, but the region's figure fell short of expectations. Flash PMI readings from Germany and France are set to drive euro price action today.

GBP

The pound bounced upon seeing its CPI readings come in line with expectations but eventually gave up ground to its counterparts later on. The headline CPI showed a 0.1% uptick while the core CPI rose from 1.1% to 1.2%. The UK jobs report is up for release today and a 0.9K increase in claimants is eyed, enough to keep the unemployment rate steady at 5.3%, but the average earnings index is set to drop from 3.0% to 2.5%.

CHF

The franc also gave up ground in recent trading sessions even though the Swiss PPI beat expectations and showed a 0.4% gain. The Swiss ZEW expectations report is up for release today and any improvements from the previous 0.0 reading could keep the currency supported.

JPY

The yen took its cue from risk aversion since there were no reports out of Japan. Fortunately for the lower-yielding currency, risk-off flows were seen during the later sessions as traders probably liquidated their holdings ahead of the FOMC statement. The Japanese flash manufacturing PMI is still due before then and a rise from the previous 52.8 figure could mean more gains for the yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls caved to the dollar but managed to advance against the European currencies. New Zealand's dairy auction showed a 1.9% rise in prices, slower than the previous 3.6% gain but still an increase nonetheless. Canada reported a worse than expected 1.1% slump in manufacturing sales but the Loonie was able to get a boost from BOC Governor Poloz's reassuring speech. New Zealand's Q3 GDP is up for release next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 17, 2015)

USD

The Fed increased rates by 0.25% as expected, upgrading growth and employment forecasts for 2016 as well. Although they downgraded their PCE inflation estimates for next year, Fed head Yellen still showed confidence in US fundamentals. In terms of data, industrial production, capacity utilization, and the flash manufacturing PMI all missed expectations. The Philly Fed index, initial jobless claims, and current account balance are up for release next.

EUR

Data from the euro zone came in mostly in line with expectations, as some figures even surprised to the upside. France printed a higher than expected manufacturing PMI but its services PMI missed the mark. Meanwhile the euro zone final CPI reading enjoyed an upgrade from 0.1% to 0.2%. The German Ifo business climate index is due today and a rise from 109.0 to 109.2 is eyed.

GBP

The pound was in a weak spot when the UK jobs report came in mostly weaker than expected. Even though the jobless rate dropped to new lows at 5.2%, claimants rose by 3.9K versus 0.9K while the average earnings index fell from 3.0% to 2.4% versus the projected 2.5% reading. Up ahead, the retail sales report is slated to show a 0.6% rebound.

CHF

The franc moved mostly sideways throughout the day as traders waited for the FOMC announcement. Data from Switzerland showed an improvement as the ZEW economic expectations index rose from 0.0 to 16.6. SECO economic forecasts are up for release today.

JPY

The yen continued to give up some of its recent wins when risk appetite returned to the markets. Japan's flash manufacturing PMI dipped from 52.6 to 52.5, which still indicated an industry expansion. Japan's trade balance is due today and the BOJ monetary policy statement is lined up for Friday.

Commodity Currencies (AUD, NZD, CAD)

The Loonie chalked up another round of losses when oil prices resumed their slide. US crude oil inventories rose by 4.6 million barrels instead of showing the estimated drop of 0.3 million barrels. Data from Canada was actually better than expected as foreign securities purchases picked up. New Zealand's GDP came in at 0.9% for Q3, higher than the previous 0.4% growth figure.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 4, 2016)

USD

The US dollar is on relatively strong footing this week, especially since the Fed recently started its rate hike cycle and data from the US came in mostly stronger than expected. The ISM manufacturing PMI is up for release today and a rise from 48.6 to 49.1 is eyed. Stronger than expected data could mean more gains for the dollar, especially if the jobs component indicates a gain.

EUR

The euro is struggling to stay afloat ahead of event risks this week, as another round of bleak data could spur expectations of additional ECB easing. For today, the German preliminary CPI and Spanish manufacturing PMI is lined up while tomorrow has the euro zone flash CPI estimates.

GBP


The pound suffered a sharp selloff at the start of this week's trading, with traders likely pricing in downbeat reports from the UK. The manufacturing PMI is due today and a small rise from 52.7 to 52.8 is expected. Net lending to individuals and mortgage approvals data are also lined up.

CHF

The franc is coming off a very weak performance last week and has gapped lower against most of its peers at the start of Monday's trading. Swiss manufacturing PMI is due today and a rise from 49.7 to 50.2 is eyed, likely providing a bit of support for the Swiss currency.

JPY

Data from Japan came in mixed over the past couple of weeks but the yen is currently being weighed down by the BOJ's surprise decision to expand its ETF purchase program. The national core CPI printed a flat reading while household spending and retail sales indicated sharper than expected declines.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start this week when China printed a weaker than expected manufacturing PMI from Caixin. The government figures released last week indicated small improvements but traders appear to be placing more credibility on the non-official figures. Australian commodity prices are due next and the New Zealand GDT auction is scheduled tomorrow.

By Kate Curtis from Trader's Way