Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Oct 07, 2016)

USD

The Greenback managed to squeeze out more gains on Thursday as medium-tier jobs data came in strong. Initial jobless claims stood at 249K versus the estimated 255K figure and the earlier 254K reading. Challenger job cuts showed a larger 24.7% fall in unemployment compared to the earlier 21.8% decline. The NFP report due today could show a 171K increase in hiring, larger than the earlier 151K gain and likely enough to keep Fed hike expectations in place. A number of FOMC officials are set to testify before the end of the US session.

EUR

The euro caved to the dollar and most of its other peers even though data came in stronger than expected. Germany reported a 1% gain in factory orders versus the estimated 0.3% uptick. German and French industrial production numbers are up for release today, along with the French trade balance.

GBP

The pound suffered a sharp drop on what appeared to be a flash crash after French President Hollande reiterated that the EU should give the UK a tough time in Brexit negotiations. He argued that leaving the union comes at a price, one that the UK should be willing to pay. The UK currency quickly recovered as traders booked profits on thin liquidity. UK manufacturing production data is due today and a 0.4% rebound is eyed.

CHF

The franc slid to the dollar but managed to hold its ground against its other counterparts. Swiss CPI came in weaker than expected with a meager 0.1% uptick in price levels versus the projected 0.2% increase. For today, the foreign reserves data is up for release and this should shed more light on whether or not the SNB conducted a form of mild intervention to keep EURCHF supported recently.

JPY

The yen continued to slide against its peers as traders booked profits off their long yen positions, but the Japanese currency managed to get a piece of the pound selloff. Data from Japan was weaker than expected, with average cash earnings down 0.1% instead of showing the estimated 0.5% gain.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still weaker against the dollar as risk aversion seems to be taking hold. Canada's jobs report is due today and an increase of 8.5K in hiring is eyed, which might be enough to keep the unemployment rate steady at 7%. The Ivey PMI is also due and a rise from 52.3 to 53.0 is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 10, 2016)

USD

The US dollar gave back some of its recent gains when the NFP reading missed expectations. The actual figure landed at 156K versus the 171K consensus but the previous reading was upgraded from 151K to 167K. Average hourly earnings rose 0.2% as expected, higher than the earlier 0.1% uptick, but the jobless rate rose from 4.9% to 5.0%. US banks are closed for Columbus Day today.

EUR

The euro was able to hold its ground after medium-tier reports from the region printed stronger than expected results. German industrial production rose 2.5% versus the projected 1.1% increase while French industrial production also beat expectations. German trade balance, Italian industrial production, and euro zone Sentix investor confidence are lined up for today.

GBP

The pound was still in a weak spot on Friday when UK manufacturing and industrial production fell short of expectations. Manufacturing production showed a 0.2% uptick versus the projected 0.4% gain while industrial production fell 0.4% instead of showing the projected 0.1% increase. The UK BRC retail sales monitor is due today.

CHF

The franc took advantage of dollar and pound weakness but was mostly weaker to the euro and yen. Swiss foreign currency reserves showed only a small increase from 627B CHF to 628B CHF, suggesting that the central bank hasn't been intervening. The Swiss jobless rate is due today and no change from the earlier 3.4% figure is eyed.

JPY

The yen regained a bit of ground on Friday after the US NFP fell short of estimates. Data from Japan, namely average cash earnings and leading indicators, were short of estimates as well so risk aversion likely supported the lower-yielding currency. Japanese banks are closed for the holiday today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness to recover from their recent slide. Canada's jobs figure beat expectations with a 67.2K gain versus the estimated 8.5K increase and the earlier 26.2K gain. Canada's Ivey PMI also beat expectations by rising from 52.3 to 58.4. Canadian banks are closed for the holiday today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 11, 2016)

USD

The US dollar resumed its climb against its peers during the US session even as traders were out for the holiday. Only low-tier reports such as the NFIB Small Business Index and labor market conditions index are due from the US today, although strong figures could still fuel the dollar's rally.

EUR

The euro was in a weak spot on Monday even after economic data came in stronger than expected. Germany's trade surplus widened from 19.4B EUR to 22.2B EUR while Italy's industrial production rebounded by 1.7%. Euro zone Sentix investor confidence was up from 5.6 to 8.5, higher than the estimated rise to 6.2. German and euro zone ZEW economic sentiment figures are due today.

GBP

The pound gapped down over the weekend and resumed its slide after filling the gaps. The UK BRC retail sales monitor showed a 0.4% rebound but traders seem to be shrugging off these upbeat reports to focus on Brexit uncertainties. There are no major reports due from the UK today.

CHF

The franc regained a bit of ground when the Swiss jobless rate held steady at 3.3% instead of rising to the projected 3.4% reading. There are no reports due from Switzerland today so the franc could take its cue from market sentiment or euro price action.

JPY

The yen made a correction from its recent selloff but soon resumed its slide against its peers. Japanese banks were closed for the holiday yesterday. Earlier today, Japan's current account balance printed a larger than expected surplus of 1.98T JPY from the earlier 1.45T JPY reading. The Economy Watchers sentiment index is due next.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were no match to dollar strength but the Loonie was able to put up a fight when crude oil prices rallied. Another informal OPEC meeting is scheduled this week and investors are optimistic that their resolve to stabilize the markets will be stronger after Putin mentioned that Russia is willing to cooperate with any deal to cut or cap production. Australia reported no change in its NAB business confidence index at 6 while home loans posted a sharper than expected 3% drop.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 12, 2016)

USD

The US dollar gave back some of its recent gains as traders probably booked profits ahead of the FOMC minutes release later today. Economic data from the US was weaker than expected but these were just low-tier reports such as the NFIB small business index and the labor market conditions index. Hawkish remarks from Fed officials could renew rate hike expectations for later this year, possibly leading to more gains for the dollar.

EUR

The euro was in a weak spot against its peers despite stronger than expected euro zone data. The German ZEW index was up from 0.5 to 6.2, higher than the 4.2 consensus, while the region's figure jumped from 5.4 to 12.3 to show a pickup in optimism. Only the euro zone industrial production and French final CPI data are due today.

GBP

The pound resumed its slide against most of its forex peers before making a sharp correction during the Asian session. There were no major reports out of the UK, leaving Brexit concerns to weigh on the British currency. BOE MPC member Cunliffe has a testimony lined up today.

CHF

The franc had a mixed performance as it consolidated to the dollar, regained ground to the euro, and slid against the pound. There were no major reports out of the Swiss economy yesterday while today has the ZEW economic expectations index lined up. A higher reading compared to the earlier 2.7 figure could revive gains for the franc.

JPY

The Japanese yen was mostly stronger as traders moved their safe-haven holdings away from the dollar and towards the yen. The Economy Watchers sentiment index was weaker than expected at 44.8, down from the earlier 45.6 figure. Japan's core machinery orders report showed a smaller than expected 2.2% decline and the preliminary machine tool orders report is due next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls tossed and turned against the dollar and the yen but were mostly stronger against the European currencies. Australia's Westpac consumer sentiment index posted a 1.1% gain while a report from Moody's indicated upbeat prospects for the economy. An informal OPEC gathering is set in Istanbul today but no output deal is eyed yet.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 13, 2016)

USD

The US dollar sold off then recovered during the release of the FOMC minutes, as the transcript still contained some degree of caution from policymakers. Still, most committee members acknowledged that the September decision was a close call and that the case for tightening has strengthened. US initial jobless claims and import prices are due today, along with crude oil inventories.

EUR

The euro was mostly weaker for the day after headlines noted that the yield spread between German and US bonds has fallen to their lowest level in ten years. Medium-tier economic reports came in line with expectations, with euro zone industrial production up 1.6% versus 1.4%. Only the German final CPI reading is up for release from the region today.

GBP

The pound made a quick bounce after UK Prime Minister May assured that Brexit terms are still negotiable, calming market fears that the UK would lose access to the single market. BOE Governor Carney will have a testimony later today and more words of reassurance could allow the pound to recover.

CHF

The franc gave up ground to most of its rivals, except for the euro. Swiss ZEW economic expectations improved from 2.7 to 5.2. There are no reports lined up from the Swiss economy today so market sentiment could play a role in price action.

JPY

Yen pairs tossed and turned during the release of the FOMC minutes as traders moved some of their yen holdings to the safe-haven dollar. Japan's preliminary machine tool orders report saw a smaller 6.3% drop compared to the earlier 8.4% tumble. The tertiary industry activity index is due today and a 0.2% dip is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to put up a fight against the dollar during the release of the FOMC minutes but soon gave back their gains upon seeing weak Chinese trade data. The surplus narrowed from 346B CNY to 278B CNY, indicating weaker demand. Oil and the Loonie retreated when a report from the OPEC revealed a pickup in production as countries likely ramped up their output in anticipation of a production cap.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 14, 2016)

USD

The US dollar returned some of its recent gains as traders booked profits off their positions on a pickup in risk appetite. Data from the US, namely initial jobless claims and import prices, turned out upbeat. US retail sales and PPI numbers are lined up for today and improvements are eyed. Headline retail sales could show a 0.6% gain while core retail sales could print a 0.4% increase. Headline PPI could show a 0.2% increase while core PPI could print a 0.1% uptick. The preliminary UoM consumer sentiment index is also due ahead of Fed head Yellen's testimony.

EUR

The euro was able to chalk up a bit of recovery to the dollar but was weaker against the comdolls. Data from the euro zone came in line with expectations as the German final CPI stood at 0.1%. Only the euro zone trade balance is due today and a wider surplus of 20.5 billion EUR is eyed from the earlier 20.0 billion EUR.

GBP

The pound managed to make a quick bounce against its rivals on a bit of profit-taking but the UK currency still looked mostly weak. There were no reports out of the UK economy yesterday while the BOE credit conditions survey and UK construction output data are due today.

CHF

The franc took advantage of dollar weakness but was no match to the pickup in the pound, euro, and yen. There were no reports out of Switzerland yesterday while today has the PPI lined up. Analysts are expecting to see a 0.1% uptick in producer prices, up from the earlier 0.3% drop.

JPY

The yen gave up ground to most of its peers when risk appetite improved in the markets. Japan's tertiary industry activity index was flat instead of showing the projected 0.2% drop. There are no reports due from the Japanese economy today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start after China printed a weak trade balance spurred by a sharp decline in exports and a surprise drop in imports. However, risk appetite picked up later in the day when US crude oil inventories revealed a large drop in production and triggered a bounce for crude oil. Chinese PPI and CPI numbers are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 17, 2016)

USD

The US dollar regained ground against its peers on Friday when retail sales and PPI reports came in the green. Headline retail sales increased 0.6% as expected while core retail sales posted a 0.5% gain versus the projected 0.4% increase. Headline PPI was up 0.3% versus the projected 0.2% increase while core PPI posted a 0.2% uptick versus the projected 0.1% rise. However, preliminary consumer sentiment was weaker than expected at 89.2 versus 92.1. US industrial production data and the Empire State manufacturing index are lined up today.

EUR

The euro continued to slump across the board even though trade data came in better than expected. The surplus widened from an upgraded 20.8 billion EUR to 23.3 billion EUR in the region, reflecting stronger demand. Euro zone final CPI readings and a speech by ECB head Draghi are lined up today, possibly setting the tone for the ECB decision later this week.

GBP

The pound made a bit of a recovery against its rivals as some traders stayed hopeful that the UK parliament hearings could lead to a soft Brexit or a delay in triggering Article 50. In his testimony, BOE Governor Carney shrugged off the massive weakness in the pound since this has been supporting economic activity. There are no major reports due from the UK today so traders could price in expectations for the top-tier releases later in the week or react to any updates from the UK government.

CHF

The franc weakened to the dollar but chalked up more gains against the euro and the pound, acting as the safe-haven in the European region. Swiss PPI posted a stronger than expected 0.3% gain in producer prices versus the projected 0.1% uptick. There are no reports due from the Swiss economy today.

JPY

The yen recouped some of its losses towards the end of the week as traders booked profits off their recent trades. Yen pairs gapped up over the weekend but these gaps were quickly filled in the past few hours. Japan's revised industrial production report is due next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls advanced across the board led by upbeat Chinese inflation readings in Friday's Asian session. There are no major reports from the comdoll economies today but RBA head Lowe has a testimony lined up in the next Asian session while New Zealand will print its quarterly CPI report. Analysts are expecting to see a flat reading for Q3 and a weaker than expected read could underscore McDermott's remarks on slow inflation for the period, reinforcing RBNZ rate cut expectations.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 18, 2016)

USD

The Greenback pulled back from its rallies after medium-tier US reports disappointed. Industrial production posted a bleak 0.1% uptick instead of the projected 0.3% gain for September while the August reading was downgraded to show a sharper decline. The Empire State manufacturing index slipped deeper into negative territory instead of showing the estimated +1.1 figure. For today, US CPI readings are due, with the headline figure likely to show a 0.3% increase and the core figure expected to post a 0.2% gain.

EUR

The euro bounced against the dollar and the yen but was still in a weak spot against the commodity currencies. Euro zone final CPI readings were unchanged at 0.4% for the headline figure and 0.8% for the core figure. There are no reports due from the euro zone economy today.

GBP

The pound made a bit of a comeback against the dollar but continued to consolidate against the yen. The UK CB leading index posted a flat reading, which is an improvement from the earlier 0.2% decline. UK CPI is up for release and stronger price pressures are eyed due to the weaker pound, with the headline figure slated to rise from 0.6% to 0.9% and the core figure projected to tick higher to 1.4%.

CHF

The franc was barely able to take advantage of dollar weakness as it gave up some ground to the euro and pound. There were no major reports out of Switzerland, though, and none are due today so these moves could be dependent on market sentiment.

JPY

The yen had a mixed performance as it simply reacted to country-specific events. Japan's industrial production figure was downgraded from 1.5% to 1.3% in August, underscoring the need for additional BOJ stimulus. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly stronger, as the Loonie got a boost from higher Canadian foreign securities purchases even with news that Iran could ramp up production to 5 million barrels per day. Meanwhile, the Kiwi also drew support from a higher than expected 0.2% gain in quarterly NZ CPI versus the projected flat reading. The Aussie was also able to rally after the release of the RBA minutes which contained upbeat forecasts for commodity prices and growth, although it had a bit of jawboning against AUD strength. New Zealand's GDT auction is lined up next.

By Kate Curtis from Trader’s Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 19, 2016)

USD

The US dollar was in a weaker spot after US CPI reports failed to impress. Headline CPI posted a 0.3% gain as expected, its fastest pace of growth in five months, while core CPI fell short with a 0.1% uptick versus the estimated 0.2% gain. US building permits and housing starts are up for release today, and traders might take their cues from risk sentiment instead. The Fed Beige Book is also up for release.

EUR

The euro was still mostly weaker against its peers since there were no reports to support the shared currency yesterday. There are no major reports lined up from the euro zone today so traders could continue to price in expectations for the upcoming ECB rate statement.

GBP

The pound enjoyed a bounce after UK CPI readings beat expectations and the British parliament seemed likely to vote on a Brexit deal before Article 50 is invoked, easing fears of a hard Brexit. Headline CPI was up from 0.6% to 1.0% and the core CPI climbed from 1.3% to 1.5%. Employment data is due today, with the claimant count change expected to show a 3.4K increase in joblessness, higher than the earlier 2.4K rise. The average earnings index is expected to hold steady at 2.3% while the unemployment rate is projected to stay unchanged at 4.9% as well.

CHF

The franc had a mixed performance as it consolidated to the dollar, advanced to the euro, and gave up ground to the pound. There were no reports out of Switzerland yesterday and there are none due today, which suggests that risk sentiment could play a major role in price action once more.

JPY

The yen was able to advance against the dollar and the euro but was mostly weaker against the rest of its peers. There were no reports out of the Japanese economy yesterday while today has the all industries activity index on tap. Analysts are expecting to see a weaker read of 0.2% compared to the estimated 0.3% uptick.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to hold on to their gains for the day, with the Loonie getting a fresh boost from a surprise draw in crude oil stockpiles according to API data. US crude oil inventories data is due today and a rise of 2.2 million barrels is eyed. New Zealand reported a gain of 1.4% in dairy prices during the latest GDT auction. Earlier today, China's reports met expectations in terms of GDP, retail sales, and fixed asset investment but industrial production was weaker than expected. The BOC decision is coming up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 20 ,2016)

USD

The US dollar had a mixed performance as it reacted to country-specific events. Data came in mixed, as building permits beat expectations with a gain from 1.15M to 1.23M while housing starts fell from 1.15M to 1.05M instead of rising to 1.18M. US existing home sales are lined up, along with the Philly Fed index and the initial jobless claims.

EUR

The euro was weighed down by remarks from EU official Weber who called for tough Brexit negotiations, admitting that the split could do damage to the remaining EU bloc as well. There were no major reports out of the region then while today has the ECB rate decision lined up. No actual easing announcements are expected but any downbeat remarks could drag the shared currency much lower.

GBP

The pound put up a strong fight in the forex arena but was unable to make much headway after EU official Weber reiterated the need to make Brexit negotiations tough on the UK. Employment data was slightly better than expected as the economy added 0.7K positions instead of losing 3.4K jobs. The average earnings index came in at 2.3% as expected while the unemployment rate didn't budge from 4.9%. UK retail sales data is due today and a 0.3% rebound is eyed.

CHF

The franc consolidated to the dollar and pound but was able to advance against the euro. There were no reports out of the Swiss economy yesterday while today has the trade balance lined up. A larger surplus of 3.27B CHF is eyed compared to the earlier 3.02B CHF, possibly indicating a pickup in export activity.

JPY

The yen had a mixed performance as it weakened to the commodity currencies but strengthened against the European currencies and the dollar. There were no reports out of the Japanese economy yesterday and there are none lined up today so the yen could continue to react to country-specific events or overall market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi held on to their gains after China's data came in mostly in line with expectations, even as Australia printed a weak jobs report. Employment fell by 9.8K in September instead of showing the estimated 15.2K rise. The BOC kept rates on hold as expected but Governor Poloz admitted that the idea of additional stimulus was discussed. The Canadian central bank also lowered growth forecasts for the year on expectations of weak exports.

By Kate Curtis from Trader's Way