Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (May 06, 2016)

USD

Dollar pairs were mostly stuck in consolidation in the US trading session as traders probably lightened their positions ahead of the NFP release. Challenger job cuts increased 5.8% year-over-year or by 65K, a slower pace compared to the previous month's jump. Initial jobless claims landed at 274K versus the estimated 261K reading. Analysts are expecting to see 203K in hiring gains for April, which might keep the jobless rate unchanged at 5.0%, while average hourly earnings could show another 0.3% gain.

EUR

The euro retreated against most of its forex peers as European banks were closed on a holiday yesterday. Only the retail PMI is up for release today and a rise from the earlier 49.2 reading could be positive for the shared currency.

GBP

The pound seemed unfazed by weaker than expected services PMI, as the reading fell from 53.7 to 52.3 versus the projected dip to 53.6. The election in London, which would lead to Boris Johnson's replacement, inspired a fresh round of anti-Brexit sentiments and allowed the currency to stay supported. There are no reports due from the UK today.

CHF

The franc sold off sharply in the latter trading sessions, although there seemed to be no clear catalyst scheduled. Traders probably liquidated some of their holdings ahead of today's Swiss foreign currency reserves data release, as this might indicate intervention efforts.

JPY

The yen consolidated to the dollar but resumed its climb to the commodity currencies in the latter sessions as risk aversion took hold. Japanese traders are returning from their holidays today but no reports are scheduled for release from Japan.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave way to risk aversion and this selloff was worsened by today's RBA monetary policy statement release. The report featured a downgrade on inflation forecasts, suggesting that there may be scope for further easing. Canadian building permits slumped by 7% instead of the projected 4.6% drop. Canada's jobs report is due today and a 0.2K increase in hiring is eyed, lower than the earlier 40.6K gain.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 09, 2016)

USD

The US dollar lost some ground to its forex counterparts on Friday when the NFP reading missed expectations. The economy added only 160K jobs in April versus the estimated 203K gain while previous readings were also downgraded. Only the labor market conditions index is up for release from the US economy today.

EUR

The euro was generally weaker against the dollar and yen but managed to advance against comdolls. Euro zone retail PMI fell from 49.2 to 47.9 to show a sharper contraction. German factory orders and the euro zone Sentix investor confidence figures are up for release today.

GBP

The pound shrugged off weaker than expected PMI readings earlier in the week and drew support from renewed anti-Brexit sentiment, with London mayor Johnson leaving his post. Only the Halifax HPI is due from the UK today.

CHF

The franc continued to sell off on Friday, especially since the foreign currency reserves data showed a climb from 576B CHF to 588B CHF. Swiss CPI is due today and a 0.2% uptick is eyed, with weaker than expected results likely to spur more franc losses.

JPY

The yen consolidated to most of its peers even with the return of Japanese traders from their long holiday. The BOJ meeting minutes were released today but these didn't spark much volatility, although the yen appears to be losing ground as of this writing.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly weaker on Friday, especially after the RBA monetary policy statement indicated a weaker inflation outlook and scope for additional easing. Later on, the Canadian jobs report showed a 2.1K drop in hiring versus the estimated 0.2K gain. Over the weekend, the Chinese trade balance beat expectations with a larger surplus of 298B CNY.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 10, 2016)

USD

The US dollar was slightly higher against its peers, as traders flocked back to the US currency when Japanese officials began jawboning again. US labor market conditions index improved from -2.1 to -0.9. US JOLTS job openings and wholesale inventories are up for release today.

EUR

The euro managed to hold its ground against most of its peers, even advancing to the US dollar. Data from the euro zone came in mostly stronger than expected, as the German factory orders rose 1.9% versus the projected 0.7% increase while the Sentix investor confidence index improved from 5.7 to 6.2, outpacing the estimate at 6.1. German and French industrial production numbers are up for release today.

GBP

The pound was slightly weaker against its counterparts as traders started pricing in expectations for this week's BOE statement. No actual policy changes are expected but officials might sound more dovish than usual, given the recent disappointments in UK PMI data. UK Halifax HPI posted a 0.8% drop in house prices versus the projected 0.1% uptick. There are no major reports lined up from the UK economy today.

CHF

The franc was able to score some gains after the Swiss CPI beat expectations with a 0.3% gain versus the projected 0.2% uptick. The Swiss unemployment rate is due today and no change from the 3.5% figure is eyed.

JPY

The yen gave up ground to its rivals when Finance Minister Aso repeated his intervention threats, citing that they will not hesitate to act if the yen rallies too sharply. Average cash earnings rose 1.4% in Japan, higher than the projected 0.6% gain.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were generally weaker as traders reacted to the 10.9% slump in Chinese imports, which prompted talks of easing from the RBA and RBNZ. NZ Finance Minister English suggested that the RBNZ might implement macro-prudential measures to cool housing inflation, possibly setting the stage for a rate cut next month. Chinese CPI came in line with expectations at 2.3% while the PPI was better than expected at -3.4% versus -3.8%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 11, 2016)

USD

The US dollar gave up ground to the commodity currencies but was able to hold steady against the euro and the yen. Medium-tier reports from the US economy turned out stronger than expected, as JOLTS job openings gained while the NFIB Small Business index improved. For today, only the US crude oil inventories data is up for release.

EUR

The euro edged lower to most of its forex peers when German and French industrial production numbers missed expectations. The former sank by 1.3% while the latter fell 0.3%. There are no reports due from the euro zone today.

GBP

The pound managed to hold on to some of its gains despite the lack of top-tier data from the UK. Medium-tier reports showed weak results, with the BRC retail sales monitor falling by 0.9% and the goods trade deficit mostly unchanged. UK manufacturing production data is due today and a 0.4% rebound is eyed.

CHF

The franc continued to retreat against its peers even as the Swiss unemployment rate came in line with expectations at 3.5%. There are no major reports due from the Swiss economy today so consolidation could be seen or the franc could be pushed around by risk sentiment.

JPY

The yen continued to weaken against its counterparts as traders worried about possible intervention. There were no reports out of Japan yesterday and only the leading indicators figure is due today. Risk sentiment could continue to drive the lower-yielding Japanese currency for the next sessions.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a strong rebound in yesterday's sessions, thanks to a pickup in crude oil. The EIA upgraded their global demand forecasts for this year and the next, acknowledging that the market is starting to calm down. In New Zealand, the RBNZ refrained from making any adjustments for lending conditions, easing rate cut speculations. There are no major reports due from the comdolls for the next few hours.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 12, 2016)

USD

The US dollar gave up ground to its forex counterparts as there were no major reports to give it any support yesterday. Initial jobless claims and import prices data are up for release today, along with speeches from FOMC member Rosengren and George.

EUR

The euro managed to regain some ground to the dollar but was weaker to the comdolls. There were no major reports out of the euro zone then while today has medium-tier data like German WPI, French final CPI, and euro zone industrial production numbers due.

GBP

The pound could be in for a lot of volatility as the BOE statement, MPC minutes, and Inflation Report are all lined up today. A downbeat statement is eyed since business conditions and trade activity have weakened recently. UK manufacturing production posted a mere 0.1% uptick while industrial production missed expectations with a meager 0.3% gain versus the projected 0.7% rise.

CHF

The franc regained ground to the dollar but weakened to the euro. There were no reports out of Switzerland yesterday and none are due today, keeping the franc sensitive to euro price action.

JPY

The yen got back on its feet yesterday as risk appetite improved in the Asian markets. Japan's leading indicators came in better than expected with its 98.4% reading versus the consensus at 96.4%. Earlier today, the current account balance came in line with expectations while bank lending data showed a 2.2% pickup in activity.

Commodity Currencies (AUD, NZD, CAD)

The comdolls advance against their peers after the US crude oil inventories report showed a drop of 3.4 million barrels in stockpiles. This eased oversupply concerns somewhat, as the reduction stemmed from Venezuela and further declines are expected from Canada in the coming weeks. New Zealand retail sales data are up for release next and slightly weaker figures are eyed. The headline figure could post a 1.0% gain while the core figure could show a 1.1% increase.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 13, 2016)

USD

The US dollar was in a weak spot in the earlier sessions but was able to get back in the game during the New York hours. Data from the US economy actually came in weaker than expected, with initial jobless claims landing at 294K and import prices posting a meager 0.3% uptick. FOMC officials sounded optimistic about economic prospects, maintaining that negative rates are not needed and that the likelihood of a rate hike is higher than what markets are pricing in. US retail sales and PPI numbers are due today.

EUR

The euro advanced in the London session but eventually retreated to its counterparts. Medium-tier euro zone data came in line with expectations then but traders probably booked profits ahead of today's top-tier releases. GDP readings from the euro zone's top economies are lined up ahead of the region's growth figure, which might show a 0.6% expansion for the first quarter. Germany is also set to print its final CPI reading while France will report its non-farm payrolls figure.

GBP

The pound experienced a lot of volatility on Super Thursday but overall, the central bank was not as dovish as expected. BOE officials even upgraded their inflation forecasts slightly, but policymakers stressed that this was contingent on EU membership. Governor Carney reiterated the risks of a Brexit, adding that a technical recession might ensue and that monetary policy alone won't be enough to counter these effects. Still, the bank kept policy unchanged as expected in a unanimous vote. BOE members Haldane and Weale have testimonies today.

CHF

The franc rallied then reversed for the day, as the currency took its cue from the euro and overall sentiment. There are still no reports lined up from the Swiss economy today so the franc could be driven by similar themes.

JPY

The yen regained a bit of ground towards the latter trading sessions, especially against the commodity currencies. The Economy Watchers sentiment index turned out weaker than expected, as it fell from 45.4 to 43.5, lower than the projected 44.9 reading. The tertiary industry activity index is due today and a 0.2% drop is eyed.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were still mostly weaker against their peers, as traders returned to their rate cut reactions and expectations. New Zealand retail sales came in slightly weaker than expected, as the headline figure rose 0.8% versus the projected 1.0% increase while the core figure posted a 1.0% gain instead of the estimated 1.1% reading. There are no reports due from the comdoll economies today, although Chinese industrial production and retail sales readings are due over the weekend.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 16, 2015)

USD

The US dollar got a boost from risk aversion and stronger than expected reports on Friday. Headline consumer spending rose 1.3% instead of posting the projected 0.3% drop while core retail sales gained 0.8%. Preliminary UoM consumer sentiment advanced to 95.8 to indicate stronger optimism. Headline PPI posted a smaller than expected 0.2% uptick but core PPI printed the estimated 0.1% gain. The Empire State manufacturing index is up for release from the US economy today and a drop from 9.6 to 7.2 is expected to show a slowdown in activity.

EUR

The euro retreated to the dollar but managed to advance against commodity currencies as risk aversion returned on Friday. Euro zone flash GDP came in at 0.5%, lower than the estimated 0.6% growth figure. German final CPI was also downgraded to show a larger 0.4% drop in price levels. European banks are closed for the holiday today.

GBP

The pound was also weaker against the dollar and yen but it was able to hold its ground against the comdolls. There were no reports out of the UK economy on Friday and none are due today so market sentiment and Brexit talks could move pound pairs.

CHF

The franc was mostly weaker against its peers, as the lack of Swiss data and the release of downbeat euro zone figures weighed on the currency. There are no reports due from Switzerland today since Swiss banks are closed for the holiday.

JPY

The yen took advantage of the run in risk aversion on Friday, especially since traders had been bracing themselves for downbeat Chinese data. However, data from Japan was also similarly weak, as reported a 26.4% year-over-year drop in preliminary machine tool orders and a sharper than expected 4.2% drop in producer prices.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were the weakest in the bunch as downbeat data brought risk aversion back to the table. Chinese figures missed expectations, as industrial production fell from 6.8% to 6.0% while retail sales slowed from 10.5% to 10.1%. Fixed asset investment was also weaker than expected. There are no major reports due from the comdoll economies for today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 17, 2016)

USD

The US dollar failed to establish a clear direction in recent trading sessions, as the lack of top-tier data left it sensitive to country-specific events. The Empire State manufacturing index fell from 9.6 to -9.0 instead of just dipping to 7.2. US CPI figures are due today and a pickup in from earlier reports is eyed. Also lined up are building permits and housing starts data, along with industrial production and capacity utilization figures.

EUR

The euro was mostly weaker against its peers even though there were no major reports out of the region as banks were closed for the holiday. Today has the region's trade balance due and a wider surplus of 23.1 billion EUR is expected.

GBP

The pound managed to advance against most of its counterparts as some polls revealed a slight lead by anti-Brexit voters. The focus could shift back to economic data today as the UK CPI is due. No change from the earlier 0.5% headline figure and 1.5% core reading is expected.

CHF

The franc gave up ground to its peers even though Swiss banks were closed for the holiday. The Swiss PPI is due today and a 0.1% uptick in producer prices is expected. Weaker than expected results, however, could mean more losses for the currency.

JPY

The yen resumed its slide against some of its forex counterparts but remained stuck in consolidation to the dollar. Preliminary machine tool orders sank by 26.4% on a year-over-year basis in Japan. The preliminary GDP reading is due in the next Asian trading session and a 1.0% growth figure is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls strengthened in recent sessions, buoyed partly by gains in crude oil. Supply disruptions in Nigeria and Venezuela convinced Goldman Sachs to assess that the market is stabilizing, predicting that prices could reach $50/barrel by the second quarter of the year. New Zealand has its GDT auction scheduled along with the PPI releases in the late US session, with downbeat data likely to push the Kiwi back down.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 18, 2016)

USD

The US dollar regained ground against its forex peers as data from the US economy came in mostly stronger than expected. Headline CPI rose 0.4% versus the 0.3% uptick expected while the core CPI posted the projected 0.2% increase. Industrial production rose 0.7%, higher than the estimated 0.3% reading, while both building approvals and housing starts gained. The FOMC minutes are up for release today and stronger hints about a June hike could spur more dollar gains.

EUR

The euro weakened to the dollar and yen but managed to bounce back against the comdolls and the pound. The region's trade balance missed expectations at a surplus of 22.3 billion EUR versus the 23.1 billion EUR consensus. Euro zone final CPI readings are due today and no changes from the -0.2% headline figure and the 0.8% core figure are expected.

GBP

The pound managed to stay resilient despite weaker than expected UK CPI readings. The headline figure fell from 0.5% to 0.3% instead of holding steady while the core figure dropped from 1.5% to 1.2%. For today, the UK jobs report is due and a 4K increase in claimants is eyed. The jobless rate is expected to hold steady at 5.1% while the average earnings index could slide from 1.8% to 1.7%.

CHF

The franc was still in a weak spot even with stronger than expected data from Switzerland. Producer prices rose 0.3% versus the projected 0.1% uptick, also showing an improvement from the earlier flat reading. There are no reports due from the Swiss economy today.

JPY

The yen was able to rake in gains against its forex counterparts after the Japanese industrial production figure showed an upward revision from 3.6% to 3.8%. Earlier today, the Japanese GDP reading posted a stronger than expected 0.4% expansion versus the estimated 0.1% growth figure. Core machinery orders are lined up next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls retreated from their recent rallies despite an API report indicating a draw of 1.1 million barrels from stockpiles. Data from Canada was weaker than expected, as manufacturing sales dipped 0.9%. In New Zealand, the GDT auction showed a 2.6% rebound in dairy prices but PPI readings missed expectations. PPI input fell 1.0% instead of gaining 0.3% while PPI output fell 0.2% instead of rising by 0.4%. In Australia, the quarterly wage price index rose 0.4%, short of the estimated 0.5% increase.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 19, 2016)

USD

The US dollar chalked up larger gains against its forex rivals when the FOMC minutes confirmed that some members were more optimistic about economic prospects. Some even argued that a June rate hike is likely if the US is able to sustain its growth, jobs, and inflation progress. There are no major reports due from the US economy today but FOMC members Fisher and Dudley have testimonies lined up.

EUR

The euro resumed its slide to the dollar but was able to hold on to its gains against its other rivals. Euro zone final CPI readings didn't contain any revisions from the -0.2% headline figure and the 0.7% core figure. ECB meeting minutes and the euro zone current account balance are up for release today.

GBP

The pound was able to advance against its forex peers when UK jobs data beat expectations. The claimant count fell by 2.4K in April instead of showing the estimated 4.0K gain in joblessness. The average earnings index showed a return in wage growth as it climbed back to 2.0% from 1.8%. The unemployment rate was unchanged at 5.1% as expected. UK retail sales data is due today and a 0.6% rebound in consumer spending is eyed.

CHF

The franc was mostly weaker against its counterparts as risk appetite came back in recent trading sessions. There were no major reports out of the Swiss economy then and none are due today so the franc could keep following risk sentiment.

JPY

The yen had a mixed performance as it continued to advance against the comdolls but gave up ground to the dollar and pound. Core machinery orders came in stronger than expected with a 5.5% gain instead of the estimated 1.9% drop. The all industries activity index is up for release next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were no match to dollar and yen strength. US crude oil inventories rose by 1.3 million barrels despite the disruptions in Nigeria, Venezuela, and Canada. Australia's jobs report printed a weaker than expected employment change of 10.8K versus 12.1K but the jobless rate fell from 5.8% to 5.7%. New Zealand visitor arrivals data is due next.

By Kate Curtis from Trader's Way