Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Jan 31, 2017)

USD

The US dollar had a volatile run but was unable to establish a clear direction while equities closed in the red. Data came in mixed, with personal spending beating expectations with its 0.5% gain versus the 0.4% consensus even as personal income fell short at 0.3%. The core PCE price index met consensus at 0.1% while pending home sales also hit the mark with a 1.6% increase. Chicago PMI and the quarterly employment cost index are lined up next.

EUR

The euro ended up mostly weaker against its peers when Germany printed a downbeat preliminary CPI reading. This could dampen the region's flash CPI readings due today, although analysts expect the headline reading to rise from 1.1% to 1.5% and the core figure to stay unchanged at 0.9%. The preliminary GDP reading is also due and a 0.4% expansion is eyed.

GBP

The pound gave up some of its recent wins to its peers even though data came in slightly better than expected. The GfK consumer confidence reading improved from -7 to -5 instead of falling to -8. UK net lending to individuals data is due today but traders could be holding out ahead of the BOE Super Thursday.

CHF

The franc raked in gains to the dollar and continued to advance against the euro despite weak Swiss data. The KOF economic barometer fell from 102.1 to 101.7 instead of rising to 102.9. There are no reports due from the Swiss economy today so the franc could be sensitive to euro movements.

JPY

The yen regained a lot of ground against its peers when US assets started selling off. Household spending and preliminary industrial production data from Japan also turned out better than expected while the BOJ refrained from making more policy changes. The BOJ press conference is due next so yen pairs might still have another round of volatility.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness but were no match to yen strength. New Zealand's visitor arrivals fell 1.3% in December while Australia's NAB business confidence figure was unchanged at 6. Canada's monthly GDP is due next and a 0.3% growth figure is eyed while New Zealand will print its quarterly jobs report. A weaker 0.8% gain in hiring is expected compared to the earlier 1.4% increase but the unemployment rate could fall from 4.9% to 4.8%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 01, 2017)

USD

The US dollar tumbled against its counterparts when President Trump called out China and Japan for currency devaluation tactics. For some, this was also a form of jawboning for the dollar. To top it off, economic data came in mostly in the red, with the CB consumer confidence index sinking from a downgraded 113.3 figure to 111.8 and the Chicago PMI dropping from 54.6 to 50.3. The ISM manufacturing PMI is due today and a rise from 54.7 to 55.0 is eyed, but all eyes and ears are likely to be on the FOMC statement.

EUR

The euro was able to take advantage of dollar weakness while riding higher against the commodity currencies as well. Euro zone headline flash CPI was stronger than expected at 1.8% versus 1.5% from the earlier 1.1% figure while the core reading was unchanged at 0.9% as expected. The flash GDP reading printed a stronger than expected 0.5% expansion versus the projected 0.4% growth figure. Final manufacturing readings from top euro zone nations and EU economic forecasts are lined up today.

GBP

The pound also climbed higher to the dollar even though medium-tier reports from the UK missed expectations. Net lending to individuals came in at 4.3 billion GBP versus the 5.3 billion GBP consensus. UK manufacturing PMI is due today and a fall from 56.1 to 55.9 is expected.

CHF

The franc chalked up another day of gains versus the dollar but gave up ground to the euro. There were no reports out of the Swiss economy yesterday while today has the manufacturing PMI due. A small rise from 56.0 to 56.1 is eyed but a higher than expected read could reinforce franc strength.

JPY

The yen held on to its gains as the BOJ refrained from making policy changes. In the presser, Governor Kuroda mentioned that CPI is likely to hit the 2% target by next year and that growth could go above potential by then. There are no major reports due from the Japanese economy today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were in a weak spot after New Zealand printed downbeat headline jobs figures. Employment change was up 0.8% as expected but the earlier figure was downgraded from 1.4% to 1.3%. The unemployment rate rose from 4.9% to 5.2% due to a higher labor force participation rate, but this could mean that the slack is not being absorbed. China's official manufacturing PMI dipped from 51.4 to 51.3, higher than the 51.2 consensus, while the non-manufacturing reading improved from 54.5 to 54.6.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 02, 2017)

USD

The US dollar failed to benefit from stronger than expected data as bulls seemed disappointed by the lack of hawkishness in the Fed statement. The FOMC kept rates on hold as expected and acknowledged that consumer and business sentiment have improved. They also removed the reference to transitory effects from energy prices on inflation but maintained that gradual tightening is warranted. Initial jobless claims and preliminary non-farm productivity and labor costs are due today.

EUR

The euro had a mixed performance as reports came in mostly in line with expectations. Spanish manufacturing PMI beat expectations while final manufacturing PMI readings from its top economies just hit the mark. There are no major reports due from the euro zone today but ECB Governor Draghi's speech could inspire some volatility.

GBP

The pound managed to hold on to its gains even with a lackluster UK manufacturing PMI which dipped from 56.1 to 55.9 as expected. Traders are holding out for today's Super Thursday with the BOE decision, MPC minutes, and Inflation Report due. No actual policy changes are expected but traders are interested to find out if the BOE is shifting its bias in accordance with Trump's administration and Brexit issues.

CHF

The franc regained ground to the dollar but was mostly weaker to its European rivals. Swiss manufacturing PMI was weaker than expected as the reading fell from 56.0 to 54.6 versus the projected 56.1 figure. Swiss retail sales is due today and a 0.5% year-over-year increase is eyed.

JPY

The yen had a mixed performance as it reacted to country-specific data and market sentiment. There were no major reports out of Japan yesterday and none are due today so sentiment and yields could continue to drive yen price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness, with the Aussie leading the pack thanks to strong trade balance and building approvals data. US crude oil inventories posted a larger than expected gain of 6.5 million barrels but the oil-related Loonie seemed to pay no mind. There are no reports due from the comdolls for the rest of the day.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 03, 2017)

USD

The US dollar was able to take a break from its slide when traders started pricing in strong NFP results. The consensus is for a 170K gain in hiring but analysts seem to be looking forward to a reading above 200K which might reinforce the Fed's hawkish bias. Average hourly earnings could show a 0.3% uptick while the jobless rate is projected to hold steady at 4.7%.

EUR

The euro was mostly weaker against its peers even though data came in closely in line with expectations. The Spanish unemployment change figure came in at 57.3K versus the projected 60.2K reading while PPI was at 0.7% versus 0.5%. For today, final services PMI readings are due from the top euro zone economies, as well as the region's retail sales figure.

GBP

The pound rallied then reversed with the BOE statement, as the central bank kept policy unchanged as expected. Policymakers upgraded growth forecasts but kept inflation estimates unchanged, hinting that they're not looking to hike anytime soon. UK services PMI is due today and a fall from 56.2 to 55.8 is expected.

CHF

The franc caved to dollar strength but held on to its gains against the euro and the pound. Swiss retail sales posted a surprise 3.5% slump instead of the projected 0.5% uptick year-over-year. There are no reports due from the Swiss economy today.

JPY

The Japanese yen regained ground against the European currencies but consolidated to the commodity currencies. There are no reports due from Japan today so the yen could be driven by bond yields in reaction to the US NFP release.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies managed to hold on to their gains against most of their counterparts, particularly the Aussie which was boosted by strong trade balance and building approvals reports earlier in the day. The Chinese Caixin manufacturing PMI showed a steeper fall from 51.9 to 51.0 versus the projected dip to 51.8. In New Zealand, ANZ commodity prices slipped 0.1%. Trump's threats on Iran also brought some jitters to the oil market.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 06, 2017)

USD

The US dollar initially cheered stronger than expected NFP data but eventually resumed its slide to its peers. The headline reading showed a gain of 227K in hiring for January, higher than the consensus at 170K and the earlier 157K figure. The unemployment rate ticked up from 4.7% to 4.8% while average hourly earnings printed a meager 0.1% uptick versus the projected 0.3% gain. ISM non-manufacturing PMI also fell short of estimates by falling to 56.5 versus the projected 57.0 figure. There are no major reports due from the US economy today.

EUR

The euro had a mixed performance as it weakened to the yen but advanced against the pound and dollar. Euro zone PMI readings were mostly in line with estimates except for the Spanish services PMI which showed slower than expected industry growth. German factory orders is due today and a 0.6% rebound is eyed while the euro zone retail PMI could show a rise from the earlier 50.4 figure.

GBP

The pound gave up ground to its peers when the UK services PMI fell short of estimates. The reading slid from 56.2 to 54.5 versus the projected 55.8 reading to show a much slower pace of industry expansion. There are no major reports due from the UK today.

CHF

The franc took advantage of dollar and pound weakness but was no match to euro strength. There were no reports out of the Swiss economy on Friday so the currency reacted to country-specific events. There are still no major reports due from Switzerland today.

JPY

The yen was on solid footing and able to take advantage of dollar weakness, as well as safe-haven demand. There were no reports out of Japan then but the drop in US bond yields encouraged investors to put their money back in Japanese bonds. Earlier today, Japan reported weaker average cash earnings growth of 0.1% versus the projected 0.4% increase.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to rake in gains to the dollar and pound but failed to budge against the yen. Chinese Caixin manufacturing PMI showed a steeper than expected drop while Australia printed a surprise 0.1% drop in retail sales instead of the estimated 0.3% increase. There are no other reports due from the comdolls today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 07, 2017)

USD

The US dollar tried to get back on its feet but ended mostly lower against its peers as equity indices closed in the red. The US labor market conditions index rose from an upgraded 0.6 reading to 1.3 to reflect sustained improvements, supporting the idea of three rate hikes this year. FOMC Harker also reiterated this view, citing that further growth and employment gains could make March a contender for a tightening announcement. JOLTS job openings and consumer credit data are lined up today.

EUR

The euro tanked against most of its peers, particularly the comdolls and the yen, as Draghi once again downplayed the pickup in inflation. He even mentioned that they could vote to increase the size and duration of the QE program if necessary. German industrial production and French trade balance numbers are on today's docket and weak results could reinforce Draghi's easing bias. German factory orders and euro zone Sentix investor confidence data were actually better than expected.

GBP

The pound was also mostly weaker against its peers as traders are still pricing in last week's PMI misses. Earlier today, the BRC retail sales monitor showed a 0.6% drop after the previous 1.0% gain. Halifax HPI is due next and a smaller 0.2% uptick is set to follow the previous 1.7% gain.

CHF

The franc was in a weak spot against most of its peers but managed to rake gains against the euro. Traders seem to be worried about the tax referendum in Switzerland since this could mean losing companies, jobs, and government revenue. Swiss SECO consumer climate data is due today and a climb from -13 to -11 is expected.

JPY


The Japanese yen was the big winner for the day as it took advantage of risk aversion in the financial markets. Japanese average cash earnings were subpar with a 0.1% uptick versus the projected 0.4% increase. Leading indicators data is due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were on stronger footing compared to their European counterparts as New Zealand reported stronger inflation expectations at 1.9% versus the previous 1.7% figure while the RBA kept rates unchanged at 1.50% as expected. Canadian trade balance, building permits, and Ivey PMI are lined up next, ahead of New Zealand's GDT auction. A pickup in dairy prices could allow the Kiwi to sustain its climb.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 08, 2017)

USD

The US dollar had a mixed performance as it merely reacted to country-specific events. Data from the economy turned out in line with expectations, with the trade deficit narrowing on stronger imports and exports and the JOLTS job openings figure mostly unchanged. There are no major reports due from the US economy today.

EUR

The euro managed to recover against some of its peers late in the day despite mixed data. German industrial production sank 3% versus the projected 0.2% uptick while the French trade balance showed a smaller than expected deficit. There are no major events in the region today.

GBP

The pound staged a late rally in the US session when BOE official Forbes talked about the possibility of a rate hike. She highlighted the strong pickup in inflation as a potential reason to tighten but warned that Brexit uncertainties could still lead to downside risks. The UK Halifax HPI posted a 0.9% drop in house prices versus the estimated 0.2% increase. BOE official Cunliffe has a speech coming up.

CHF

The franc was still mostly weaker against its peers as traders started looking to the tax reform referendum later this month. This could mean losses of revenue and jobs in the Swiss economy if passed so further economic weakness is eyed. SNB foreign currency reserves were mostly unchanged so there has been no evidence of forex intervention.

JPY

The Japanese yen paused from its recent rallies as a bit of risk appetite returned to the US markets. Medium-tier reports such as the current account balance turned out weaker than expected and the Economy Watchers Sentiment index is still up for release.

Commodity Currencies (AUD, NZD, CAD)

The comdolls rallied and reversed even after New Zealand reported a 1.3% gain in dairy prices during its latest auction. The US EIA projected lower production this year but increased its output estimate for 2018 while reducing the demand forecast. Canada's reports were all in the red, as the trade balance printed a smaller surplus while the Ivey PMI showed a steeper drop than expected. The RBNZ decision is coming up next and no changes in interest rates are expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 09, 2017)

USD

The US dollar had another mixed performance as there were no major reports to provide any direction. Besides, US President Trump can't seem to make up his mind if he wants a strong or weak dollar. Initial jobless claims and final wholesale inventories are up for release today but price action could hinge mostly on market sentiment.

EUR

The euro was in a weak spot against most of its peers as traders continued to price in the implications of Draghi's downbeat views on monetary policy. There were no major reports out of the euro zone yesterday while today has the trade balance due. A wider surplus of 23.2 billion EUR is eyed.

GBP

The pound carried on with its climb for another day, boosted by the hawkish remarks from BOE official Forbes who said that higher inflation expectations could lead the central bank to consider hiking rates. There are no major reports due from the UK today so sterling could continue to benefit from this view unless other headlines pop up. BOE Governor Carney has a speech due.

CHF

The franc regained a bit of ground against its forex counterparts even though there were no major reports from the Swiss economy. The Swiss jobless rate is due today and no changes to the 3.3% reading is expected so market sentiment and currency-specific reports could push franc pairs around.

JPY

The yen resumed its rally against its higher-yielding rivals as risk aversion was present in the markets. Data from Japan came in mostly stronger than expected, led by the 6.7% jump in core machinery orders. Preliminary machine tool orders data is due next and another strong read could mean more support for the yen.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was under some selling pressure on talks of a new border tax on Canadian imports to the US and after the US crude oil inventories report showed a larger buildup in stockpiles. The RBNZ kept rates on hold at 1.75% as expected but signaled some scope for cuts as they pushed their 2% inflation target date a couple of quarters later. RBA Governor Lowe has a speech coming up.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 10, 2017)

USD

The US dollar strengthened across the board on Trump's promise to announce a "phenomenal" tax plan in the coming weeks. Equity indices closed at record highs, buoyed by a pickup in aviation shares on promises of reform in that industry as well. Initial jobless claims turned out better than expected at 234K versus 249K, reflecting strong hiring momentum, while final wholesale inventories came in line with expectations of a 1.0% increase.

EUR

The euro caved to dollar strength and was also weaker against the commodity currencies. German trade balance turned out weaker than expected at a smaller surplus of 18.4 billion EUR versus the estimated 23.2 billion EUR figure. French and Italian industrial production numbers are due today, along with the French preliminary non-farm payrolls figure.

GBP

The pound gave up ground to the dollar but managed to hold on to some of its recent gains against the rest of its peers. There were no major reports out of the UK economy yesterday while today has manufacturing and industrial production numbers due. Manufacturing production could post a 0.3% uptick while industrial production could indicate a 0.2% decline.

CHF

The franc was weaker across the board as traders transferred some of their safe-haven holdings to the dollar. Also, market watchers are wary of the tax reform referendum in Switzerland and what it could mean for jobs and the economy. The Swiss jobless rate was unchanged at 3.3% and there are no reports due today.

JPY

The Japanese yen was a big loser in recent sessions as traders renewed their long dollar positions. Apart from that, traders are wary of currency manipulation being discussed by Trump and Abe during their meeting today. Japan's tertiary industry activity index is due next and a 0.1% decline is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi was off to a weak start due to the RBNZ's slightly dovish tone during their policy statement while the rest of the comdoll gang tried to put up a fight against USD strength. Canada's jobs report is due today and a 10.1K drop in hiring is eyed while the jobless rate could hold steady at 6.9%. China's trade balance is due next and a strong read could reinforce comdoll gains.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 13, 2017)

USD

The US dollar held on to its recent gains as traders are hopeful that Trump can announce details on his tax reform plan soon. Economic data from the US was actually weaker than expected on Friday, as the preliminary UoM consumer sentiment index fell from 98.5 to 95.7, worse than the estimated drop to 97.9. There are no major reports due from the US economy today.

EUR

The euro was mostly weaker against its peers after medium-tier data came in mixed. French industrial production slid 0.9% versus the estimated 0.6% dip while preliminary non-farm payrolls improved by 0.4% versus 0.3%. Italian industrial production was also stronger than expected at 1.4%. Only the German wholesale price index is due today.

GBP

The pound had a mixed performance as it slid to the comdolls and dollar but advanced against the yen. UK manufacturing production turned out stronger than expected with a 2.1% gain versus the projected 0.3% uptick while industrial production rose 1.1% instead of falling by 0.2%. There are no reports due from the UK economy today.

CHF

The franc was weaker against most of its peers, except to the euro. There were no reports out of the Swiss economy on Friday as the selloff was inspired by risk appetite and there are no reports due today. This suggests that market sentiment could still be the main driver of franc price action.

JPY

The yen was one of the weaker performers at the end of the week as traders were uneasy ahead of the meeting between Trump and Abe. Also, tertiary industry production fell by 0.4% versus the projected 0.1% dip. Over the weekend, the preliminary GDP reading came in below expectations with a 0.2% expansion versus the projected 0.3% growth figure.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground to the dollar but managed to hold on to their gains against the yen and European currencies. Risk appetite was present as China reported a stronger than expected trade surplus of 355 billion CNY versus the estimated 295 billion CNY figure. Jobs data from Canada also turned out stronger than expected, with the economy adding 48.3K jobs in January instead of shedding 10.1K positions. New Zealand's food price index is due next.

By Kate Curtis from Trader's Way