Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Jan 17, 2017)

USD

Most dollar pairs were trading sideways as US traders were off on the Martin Luther King Day holiday. Traders are set to return to their desks today but only the Empire State manufacturing index is up for release, along with a speech by FOMC member Dudley.

EUR

The euro seems to be in a weak spot ahead of this week's events, particularly UK PM May's speech. Any indication that they're willing to give up access to the single market could also mean repercussions for the bloc's trade revenues. Euro zone trade balance already came in weaker than expected with a 22.7 billion EUR surplus while ZEW economic sentiment readings from Germany and the entire region are lined up today.

GBP

The pound was off to a poor start for the week in anticipation of "hard Brexit" talk from PM May. If she reiterates how they're willing to forego the single market in exchange for immigration controls, the UK currency could be in for another wave down. UK CPI readings are also up for release and gains in the headline and core figure are eyed, with BOE Governor Carney recently emphasizing that they have a limited tolerance for strong inflation.

CHF

The franc tossed and turned against the dollar while consolidating to the euro and advancing against the pound. The Swiss currency could serve as a safe-haven for European trades but investors are still wary of SNB intervention. There are no reports due from the Swiss economy today.

JPY

The yen continued to take advantage of risk-off moves as traders are shying away from the dollar on Trump's upcoming inauguration. Data from Japan has been in line with estimates, as the tertiary industry activity index printed a 0.2% uptick while the preliminary machine tool orders report saw a 4.4% rebound. Revised industrial production data is lined up next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls held on to most of their recent gains, thanks to rising commodity prices. New Zealand's NZIER business confidence index improved from 26 to 28 while new home loans in Australia posted a stronger than expected 0.9% gain. New Zealand's GDT auction is due next and a pickup in dairy prices could spur more Kiwi gains.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 18, 2017)

USD

The dollar weakened to most of its counterparts as Fed rhetoric, weak data, and Trump jitters were in play. The Empire State manufacturing index fell from 9.0 to 6.5, lower than the 8.1 consensus, while FOMC member Dudley cast doubts on the Fed's rate hike time line. For today, FOMC member Kashkari and Fed head Yellen have testimonies lined up.

EUR

The euro carried on with its slide against its forex counterparts as ZEW economic sentiment readings came in weaker than expected. In Germany, the reading rose from 13.8 to 16.6, short of the estimated improvement to 18.9 while the region's figure ticked up from 18.1 to 23.2. Euro zone final CPI readings are due today.

GBP

The pound erased a lot of its earlier losses so far this year when PM May took the stage and reassured market watchers that the UK can emerge stronger from Brexit. To top it off, UK CPI readings beat expectations as the headline and core figures rose to 1.6%. Claimant count change is due today and a 4.6K increase in joblessness is eyed, but a faster pace of growth in average earnings could still keep the pound propped up.

CHF

The franc rallied against the dollar but gave up ground to the pound in recent sessions. There were no reports out of Switzerland then and none are due today so the currency could keep reacting to country-specific events.

JPY

The yen continued to advance against the dollar and most of its rivals, except against the pound. Japan's industrial production reading was unchanged at 1.5% as expected. There are no reports due from Japan today but the yen might continue to benefit from anti-USD sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls fell victim to pound strength but managed to hold on to their wins against the euro and the dollar. New Zealand reported a 0.6% rebound in dairy prices during the latest auction. The BOC statement is due today and upgraded forecasts could mean more gains for the Canadian dollar.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 19, 2017)

USD

The US dollar made a strong comeback in the forex arena, buoyed by upbeat data and hawkish remarks from Fed head Yellen. CPI and industrial production reports came in line with consensus while Yellen praised the economy for moving closer to achieving the Fed's dual mandate of 2% inflation and full employment. She also mentioned that not hiking soon enough could force the Fed to tighten too aggressively, which increases the odds of a recession. Initial jobless claims, building permits and housing starts, and the Philly Fed index are all due today.

EUR

The euro gave up ground to the dollar but advanced against the yen, Kiwi, and Loonie. Final CPI readings in the region were unchanged at 1.1% for the headline figure and 0.9% for the core figure. The ECB statement is coming up today and traders are interested to find out if the central bank is looking to taper its stimulus program anytime soon, given the recent improvements in data.

GBP

The pound continued to advance against most of its peers when UK jobs figures surpassed expectations. The economy saw a 10.1K drop in joblessness instead of the estimated 4.6K increase in claimants. The previous reading was also upgraded while the average earnings index indicated a faster pace of wage growth at 2.8%. There are no major reports due from the UK economy today.

CHF

The franc gave up ground to the dollar but managed to hold on to its lead against the pound and euro. There were no reports out of Switzerland yesterday while today has the PPI on tap. An increase of 0.2% in producer prices is eyed, stronger than the earlier 0.1% uptick.

JPY

The yen was mostly weaker, except against the Loonie, as traders flocked back to the US dollar. There were no major reports out of the Japanese economy yesterday and none are due today so market sentiment could keep pushing yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly able to stay resilient, except for the Loonie when the BOC statement took place. Governor Poloz mentioned that a rate cut is still a possibility if downside risks materialize, particularly when it comes to US tax changes and Trump's fiscal policy plans. Australia reported a higher than expected 13.5K increase in employment and an improvement in its participation rate. Crude oil inventories and Canadian manufacturing sales data are lined up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 20, 2017)

USD

The US dollar failed to establish a clear direction in recent trading as it initially rallied on upbeat data but soon gave up its intraday gains. The Philly Fed index, initial jobless claims, and housing starts figures came in better than expected but traders seem wary of Trump's inauguration later on in the day. Additional volatility could be in play and profit-taking ahead of the event could take place.

EUR

The euro had a sharp selloff after the ECB statement as Draghi clarified that the recent pickup in inflation was merely spurred by higher energy costs and not indicative of strong underlying pressures. He also repeated that policymakers haven't discussed QE tapering yet and that there are risks from Brexit and Trump. There are no reports due from the euro zone today.

GBP

The pound continued to advance against most of its counterparts even though there were no major reports out of the UK yesterday. Traders seem to be assured by UK PM May's testimony and recent upside data surprises. UK retail sales data is due today and a 0.1% dip in price levels is expected.

CHF

The franc continued to consolidate to the euro but gave up ground to the pound. Swiss PPI came in line with expectations of a 0.2% increase, signaling some upside inflationary pressures. There are no reports due from Switzerland today so the franc could be driven by market sentiment.

JPY

The yen was mostly weaker compared to its counterparts, except for the Canadian dollar. There have been no major reports out of Japan yesterday so country-specific events pushed yen pairs around. There are still no reports due from Japan today but the pickup in risk appetite stemming from upbeat Chinese data seems to be keeping a lid on yen gains.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi managed to hold on to their lead, thanks to Chinese reports coming in mostly in line with estimates. The economy expanded by 6.8% versus 6.7% in Q4 while retail sales picked up and industrial production lagged slightly. Australia's jobs figures also beat expectations but rising crude oil stockpiles dampened the Loonie's gains. Canadian CPI and retail sales figures are due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 23, 2017)

USD

The US dollar continued to edge down against its counterparts even after Trump's inauguration, as investors remained wary of fiscal policy plans and changes in trade relations. After all, Trump did say that he plans on renegotiating NAFTA with Canada and Mexico. There are no major reports from the US economy today.

EUR

The euro recovered against most of its rivals on Friday even though there were no major reports out of the region. Today has the euro zone consumer confidence index on tap and no change from the previous -5 figure is eyed. ECB head Draghi has a testimony lined up and he might reiterate how the pickup in energy-based inflation might not be enough to prompt a discussion on tightening.

GBP

The pound also rebounded against its peers even though UK retail sales printed a dismal 1.9% slide versus the projected 0.1% dip. The sharp rise in price levels is likely taking its toll on consumer behavior, as this may have led households to trim purchases even during the holiday season. There are no reports due from the UK today.

CHF

The franc took advantage of dollar weakness but was stuck in consolidation against its European counterparts. There were no reports out of the Swiss economy on Friday and none are due today so the currency could take its cue from market sentiment and country-specific data.

JPY

The yen got back on its feet on Friday, due mostly to the selloff in the dollar and the rise in risk aversion. There were no reports out of the Japanese economy then while today has the all industries activity index due.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were able to advance to the dollar but the Loonie lagged as the BOC's dovish tone continued to dampen the currency's gains.To top it off, data from Canada turned out weaker than expected as headline CPI and retail sales came up short. Canada's wholesale sales report is due today and a 0.3% uptick is expected.

Dampened the Loonie's gains. Canadian CPI and retail sales figures are due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 24, 2017)

USD

The US dollar was still a big loser in recent sessions as traders seemed hesitant to bet on the economy with Trump taking the lead. The new President has signed an executive order quitting TPP and halting federal hiring while discussing his plans to renegotiate NAFTA with Mexico and Canada. Treasury Secretary nominee Mnuchin warned against excessive USD appreciation which would be negative in the short term. US flash manufacturing PMI, existing home sales, and Richmond manufacturing index are due next but the spotlight is likely to stay on Trump.

EUR

The euro had a mixed performance as it advanced to the dollar and Loonie while sinking to the yen, Aussie, and Kiwi. There were no major reports out of the euro zone yesterday while today has the flash manufacturing and services PMIs on tap. A slight dip in the manufacturing sector is eyed while services could continue to pick up.

GBP

The pound also raked in some gains but its rallies were limited by the upcoming event risk. The UK High Court ruling on the need to secure parliamentary approval before invoking Article 50 is up for release today, and this could determine how long the UK economy will be in limbo. UK public sector net borrowing data is also due.

CHF

The franc kept advancing to the dollar but was still stuck in consolidation to the euro. There were no reports out of the Swiss economy yesterday while today also has an empty economic schedule, which suggests that the franc could react to country-specific events and overall market sentiment.

JPY

The yen remained the beneficiary of risk-off moves particularly during the Asian session. Data from Japan was better than expected today, as the flash manufacturing PMI climbed from an upgraded 52.4 figure to 52.8 to reflect a faster pace of industry growth instead of dipping to 52.3.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the weakest of the bunch as Trump's plans to negotiate NAFTA could have repercussions on Canada's exports. Wholesale sales came in slightly below estimates with a 0.2% uptick versus the projected 0.3% gain. Australia's CB and MI leading indices are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 25, 2017)

USD

The US dollar regained some ground in recent trading as data came in mostly stronger than expected and the S&P 500 index reached record highs. The flash manufacturing PMI rose from 54.3 to 55.1, higher than the projected 54.6 figure, while the Richmond manufacturing index also advanced. Existing home sales fell but this was mostly due to tighter inventory. There are no major reports due from the US today so traders could pay closer attention to Trump's moves.

EUR

The euro continued to advance against most of its peers as the UK High Court ruling eased some Brexit concerns. Also, euro zone reports came in mixed, with German flash manufacturing PMI and French flash services PMI beating expectations. German Ifo business climate is due today and a rise from 111.0 to 111.3 is expected.

GBP

The pound had a volatile time during the announcement of the UK High Court ruling but the decision to require parliamentary approval before invoking Article 50 proved to be bullish for the currency. This could give the government and lawmakers time to iron out their negotiation game plan before debating with EU officials. UK public sector borrowing data also indicated improving financial conditions. CBI industrial order expectations is due today.

CHF

The franc edged slightly lower against the euro and the pound as risk appetite improved and the dollar stabilized. There were no reports out of the Swiss economy yesterday while today has the UBS consumption indicator on tap. Any decline from the earlier 1.43 figure could push the franc lower.

JPY

The yen gave up a lot of its recent gains when demand for the dollar returned. Japanese flash manufacturing PMI and trade balance came in stronger than expected. The surplus narrowed from 0.47T JPY to 0.36T JPY but this was better than the projected 0.22T JPY reading.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up some of their recent gains to the dollar but the Loonie managed to stay resilient as Trump signed the executive order for the Keystone XL pipeline construction. This could shore up demand for Canada's energy resources, which would support growth and hiring. In Australia, the quarterly CPI missed estimates with a 0.5% uptick versus the projected 0.7% increase. US crude oil inventories data is due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 26, 2017)

USD

The US dollar failed to benefit from the strong rallies in equities, even as the Dow 30 index surged past the 20K mark. Risk appetite appears to be returning and shoring up demand for higher-yielding currencies. Only the crude oil inventories report was printed from the US economy yesterday while today has initial jobless claims, goods trade balance, flash services PMI, and new home sales due.

EUR

The euro continued to advance against most of its peers even though data from the region came in weaker than expected. The German Ifo business climate index printed a surprise drop from 111.0 to 109.8 versus the projected rise to 111.3. As it turns out, German manufacturers are less optimistic about current and future business conditions in the country, possibly due to Brexit concerns. Spanish unemployment rate, German GfK consumer climate index, and Italian retail sales are lined up today.

GBP

The pound was one of the strongest performers of the bunch as it continued to rally on the heels of the UK High Court ruling. Also, UK CBI industrial order expectations rose from 0 to 5, higher than the projected reading at 2. The UK preliminary GDP reading is due today and 0.5% growth is expected for the fourth quarter of 2016. Stronger than expected data could assure traders that the UK is staying resilient even with Brexit

CHF

The franc continued to tread carefully against the euro and dollar but it gave up more ground to the pound. The UBS consumption indicator showed an improvement from an upgraded 1.45 reading to 1.50 while Credit Suisse's economic expectations index also rose from 12.9 to 18.5. Switzerland's trade balance is due today and a narrower surplus is eyed.

JPY

The yen settled into consolidation against most of its rivals as traders are starting to feel stronger risk appetite. There have been no major reports out of the Japanese economy yesterday and none are due today so it could be all about market sentiment from here.

Commodity Currencies (AUD, NZD, CAD)

The Loonie continued its advance on reports that the Keystone XL pipeline might commence construction soon, shoring up demand for Canada's energy resources. However, gains were limited as the US crude oil inventories report showed a larger buildup in stockpiles. In New Zealand, the Q4 CPI beat expectations with a 0.4% uptick versus the projected 0.3% increase. Australia's banks are closed for the holiday today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 27, 2017)

USD

The US dollar regained a bit of ground against its peers as traders seem to be buying into Trump's protectionist plans. A list of infrastructure priority projects has been compiled and equities seem to be cheering the prospect of fiscal stimulus, tax reform, and financial deregulation. US advanced GDP data is due today and a slower growth figure of 2.1% is eyed. Durable goods orders data is also due.

EUR

The euro gave up some ground to the dollar and its other rivals even though data came in mostly stronger than expected. The German GfK consumer climate index advanced from 9.9 to 10.2 versus the 10.0 consensus and Spain reported an improvement in its jobless rate. However, Italy's retail sales report printed a surprise 0.7% drop versus the projected 0.1% uptick. There are no major reports due from the euro zone today.

GBP

The pound continued to advance against most of its peers as traders seem hopeful about a bilateral trade deal between the UK and the US ahead of Prime Minister May's trip to Washington. In that case, this could reassure businesses that activity can stay supported even if they wind up giving up access to the single market. UK preliminary GDP also came in stronger than expected with 0.6% growth, keeping investors confident that the UK economy is staying resilient. There are no reports due from the UK today.

CHF

The franc finally broke out of its consolidation against the euro even while consolidating to the pound and dollar. Swiss trade balance was weaker than expected at a smaller 2.71 billion CHF surplus compared to the estimated 2.81 billion CHF surplus. There are no reports due from the Swiss economy today.

JPY

The yen gave up ground against its peers as the BOJ pursued moves to target the yield curve. Policymakers have decided to make bond-buying adjustments in order to flatten the yield curve in reaction to changing US bond yields. Inflation reports came in better than expected as the Tokyo core CPI printed a 0.3% dip versus the projected 0.4% drop while the national core CPI showed a 0.2% decline versus the projected 0.3% tumble.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave back some of their gains to the dollar but the Loonie managed to edge higher on expectations of rising oil prices and a pickup in the Canadian energy sector due to the Keystone XL pipeline construction. Inflation data from Australia was mixed as import prices rose 0.2% versus 0.4% while PPI was up 0.5% versus 0.2%. Chinese banks are closed for the Spring Holiday today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jan 30, 2017)

USD

The dollar managed to regain ground towards the end of the week despite weaker than expected Q4 GDP data. The economy grew by 1.9% in the period, slower than the estimated 2.1% growth figure and the earlier 3.5% expansion. UoM consumer sentiment data was revised up from 98.1 to 98.5, outpacing the consensus at 98.2. Core PCE price index, along with personal spending and income data, is due today.

EUR

The euro held its ground on Friday as it got support from stronger than expected German import prices data. The report showed a 1.9% gain versus the projected 1.3% increase, signaling stronger inflationary pressures down the line. German preliminary CPI and Spanish flash GDP data are lined up today and another round of strong results could keep the shared currency afloat.

GBP

The pound gave back some of its gains from earlier in the week as traders likely booked profits before the weekend. There were no reports out of the UK then and none are due today, leaving traders to price in their expectations for the BOE decision later on this week.

CHF

The franc slipped back in consolidation on Friday after scoring a few gains against its rivals. There were no reports printed from Switzerland then while today has the KOF economic barometer on tap. An improvement from 102.2 to 102.9 is expected so this could allow the Swissy to stay afloat.

JPY

The yen gave up ground against most of its counterparts towards the end of the week as traders got wind of reports that the BOJ adjusted its bond purchases to target the yield curve. More details on this are expected for their upcoming monetary policy statement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls failed to establish a clear direction against the dollar but managed to take advantage of yen weakness. Australian inflation reports were mixed as import prices came in short while PPI beat expectations. Over the weekend, New Zealand reported a smaller trade deficit of 41 million NZD. There are no major reports due from the comdolls today while Chinese banks are closed for the holiday.

By Kate Curtis from Trader's Way