Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Feb 28, 2017)

USD

The US dollar initially sold off upon seeing mixed durable goods orders results and a sharp drop in pending home sales. Headline durable goods orders rose 1.8% versus the projected 1.6% rise while core durable goods orders fell 0.2% instead of increasing by 0.5%. US President Trump admitted that they're not ready to announce tax reform plans until a proposal to replace Obamacare is made but said that he will announce something on infrastructure and security spending in his speech in front of the joint sessions of Congress today. US preliminary GDP data is also due and an upgrade from 1.9% to 2.1% is eyed.

EUR

The euro made a bit of a recovery against its peers when more polls indicated that Macron is advancing against Le Pen, thereby reducing odds of a Frexit. French consumer spending, CPI and GDP are lined up today and upbeat readings could mean more gains for the shared currency. In the meantime, headlines on Italy and Greece could also influence euro trading for the rest of the week.

GBP

The pound took some hits as Scottish referendum talks intensified. FM Sturgeon mentioned that they might call for a vote once the UK triggers Article 50 by March, as the nation actually voted to stay in the bloc during the EU referendum last year. There are no reports due from the UK today so Brexit talks in the House of Lords could also have an impact on pound price action.

CHF

The franc was mostly weaker against its peers but wound up advancing to its European rivals. There were no surprises in SNB member Zurbrugg's speech yesterday while there are no reports lined up from the Swiss economy today.

JPY

The Japanese yen returned some of its recent gains on profit-taking and a bit of improvement in dollar demand. Data from Japan came in mixed as the preliminary industrial production report showed a surprise 0.8% dip versus the projected 0.4% increase while the retail sales report printed a 1.0% rise versus the estimated 0.9% gain. Japanese housing starts data is due next and a slower gain of 3.3% compared to the earlier 3.9% reading is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls moved mostly sideways or in reaction to currency-specific events as there were no major market events yesterday. New Zealand printed a wider trade deficit of 285 million NZD from the earlier 36 million NZD shortfall. Underlying Canadian inflation figures are up for release and this should provide some clues on how the BOC statement might sound like later this week.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 01, 2017)

USD

The US dollar was off to a weak start in the absence of upgrades in its Q4 GDP reading of 1.9% but soon recovered upon seeing stronger Chicago PMI and Richmond manufacturing index readings. Dollar traders appear to be holding out for Trump's speech during which is is set to unveil infrastructure spending and security spending plans. As for data, US personal spending and income, along with the core PCE price index, are lined up today. The ISM manufacturing PMI is also up for release and a rise from 56.0 to 56.2 is expected.

EUR

The euro was able to hold on to its recent gains as more polls indicated that French candidate Le Pen is losing her lead, thereby reducing odds of a Frexit. Medium-tier reports from France and Italy printed mixed results, with French consumer spending and GDP meeting expectations and Italian CPI beating consensus with a 0.3% gain. German preliminary CPI and Spanish manufacturing PMI are lined up today, along with German unemployment change data and final manufacturing PMI readings.

GBP

The pound slid lower to its peers when the odds of a Scottish referendum happening soon increased. UK manufacturing PMI is due today and a small dip from 55.9 to 55.7 to reflect a slower pace of industry growth is expected. A larger drop could confirm that Brexit risks are starting to take their toll on economic performance and set the tone for the rest of the PMIs due later in the week.

CHF

The franc continued to advance against its European counterparts and even chalked up some wins to the yen. The Swiss KOF economic barometer rose from an upgraded 102.0 reading to 107.2, outpacing the consensus at 102.2 to reflect a strong improvement in current conditions and outlook. The UBS consumption indicator is lined up today and a climb from the earlier 1.50 figure could be positive for the franc.

JPY

The Japanese yen gave up ground to most of its counterparts, except for the Canadian dollar. Japanese housing starts came in stronger than expected at 12.8% versus 3.3% while capital spending for the previous quarter rose 3.8% versus 0.6%. The final manufacturing PMI was downgraded from 53.5 to 53.3 instead of being upgraded to the 53.6 consensus.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the big loser for the day even with mixed underlying inflation reports, as traders appear to be bracing for a downbeat BOC statement later today. In their previous meeting, the central bank upgraded GDP forecasts but Governor Poloz warned that a rate cut is still on the table. Earlier today, Australia printed a stronger than expected 1.1% growth figure versus the 0.7% consensus while China's PMI readings came in mostly stronger than expected. The official manufacturing PMI rose from 51.3 to 51.6 while the Caixin version improved from 51.0 to 51.7 versus the consensus at 50.9. RBNZ head Wheeler also has a speech coming up.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 02, 2017)

USD

The US dollar continued to rally against its counterparts as traders focused on Fed rate hike talks and the fact that Trump sounded more presidential in his recent testimony in front of Congress. Economic data was also mostly stronger than expected, with the ISM manufacturing PMI up form 56.0 to 57.7 versus the 56.2 forecast. Core PCE price index came in line with expectations of a 0.3% gain while personal income picked up by 0.4% versus 0.3% to reflect stronger wage growth. Challenger job cuts and initial jobless claims data are due today.

EUR

The euro rallied on mostly upbeat data but wound up returning its intraday gains. German unemployment fell by 14K versus the projected 10K drop while final manufacturing PMI readings printed mixed results. German import prices, Spanish unemployment change, and flash CPI estimates are lined up today. Weaker inflationary pressures could underscore Draghi's view that the pickup has just been temporary, keeping the ECB on its dovish stance.

GBP

The pound tanked across the board when the Brexit bill continued to encounter friction in the House of Lords. Amendments to the status of UK citizens in EU nations are being urged so this could mean a delay in Prime Minister May's Article 50 timeline and more uncertainty. UK manufacturing PMI turned out weaker than expected by falling from 55.7 to 54.6 versus the estimated rebound. The construction PMI is due today and no change to the earlier 52.2 reading is eyed.

CHF

The franc consolidated to the euro but picked up against the pound and Japanese yen. Swiss manufacturing PMI climbed from 54.6 to 57.8 to reflect a much faster pace of industry expansion while the UBS consumption indicator improved from 1.38 to 1.43. Swiss GDP is due today and a 0.5% expansion is eyed.

JPY

The yen was in a weak spot against some of its counterparts as demand for the dollar picked up again. There were no major reports out of Japan then so the moves were mostly due to changing market sentiment. Japanese household spending and CPI figures are due in the next Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was unable to gain much traction even after the GDP report printed a stronger 1.1% growth versus the projected 0.7% figure. China's PMI readings also beat expectations, signaling stronger demand for Australia's raw material products. The BOC kept rates on hold at 0.50% as expected while downplaying the recent increase in employment and inflation. Canada's GDP is due next and a 0.3% expansion is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 03, 2017)

USD

The dollar continued to advance against its peers as risk aversion came into play. Initial jobless claims came in stronger than expected and traders continue to expect strong jobs momentum, which could confirm a Fed rate hike in March. US ISM non-manufacturing PMI is lined up and no change to the earlier 56.5 figure is eyed. Traders are also likely to pay close attention to FOMC head Yellen's testimony, along with speeches from other voting members Fischer, Evans, and Powell.

EUR

The euro continued to recover against most of its peers, particularly the comdolls as political risks seemed to subside. Still, it's worth noting that reports showed Greece asking for financial assistance from the World Bank, which means that its debt troubles are far from over and that a default remains possible. The headline CPI flash estimate came in at 2.0% versus 1.9% while the core reading came in line with consensus at 0.9%. German retail sales and final services PMI readings are due.

GBP

The pound was still in a weak spot but it managed to advance against the commodity currencies as Prime Minister Theresa May seems less inclined to give in to any Brexit delays. UK construction PMI ticked up from 52.2 to 52.5 instead of holding steady. Services PMI is due today and a fall from 54.5 to 54.2 is eyed, likely resulting to some pound losses if the actual reading disappoints.

CHF

The franc had a mixed performance as it functioned mostly as a counter-currency. A bit of weakness can be observed as this Swiss currency has also been tracking the performance of gold, and the precious metal chalked up losses in recent sessions. Swiss retail sales showed a smaller than expected 1.4% fall versus the projected 2.0% slump. There are no reports due from the Swiss economy today.

JPY

The yen continued to stay strong against its peers, taking advantage of risk-off moves in the market. Recent reports turned out mixed, with household spending down 1.2% versus the projected 0.3% dip and the Tokyo core CPI posting a 0.3% drop in price levels instead of the estimated 0.2% uptick. The national core CPI printed a 0.1% increase instead of staying flat while Japanese consumer confidence slid from 43.2 to 43.1 instead of improving to 43.7.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were the big losers for the day as risk aversion came into play. Canada's December GDP came in line with expectations of a 0.3% expansion but the oil-related currency dipped as natural gas storage in the US showed a buildup in stockpiles. In New Zealand, ANZ commodity prices recovered by 2.0%. Australia's trade surplus came in short of estimates for January due to a 3% drop in exports.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 06, 2017)

USD

The US dollar staged a strong rally against its peers late on Friday after FOMC policymakers confirmed the possibility of a March Fed rate hike. Yellen admitted that waiting too long to tighten could also be harmful for the economy and that they are simply waiting to see if inflation and employment come in line with their expectations before hiking. US factory orders data is due today and FOMC member Kashkari will deliver a speech.

EUR

The euro also advanced against its peers on Friday despite mixed data. German retail sales and the region's overall consumer spending figure both missed expectations but final services PMI reports were slightly better than expected. Polls continue to show Macron leading against Le Pen, easing fears of a Frexit and further instability. Euro zone Sentix investor confidence and retail PMI are lined up today.

GBP

The pound was still mostly weaker on Friday after the services PMI printed a weaker than expected reading. The index fell from 54.5 to 53.3, lower than the expected 54.2 reading and indicative of a slower pace of expansion. BOE MPC member Hogg has a testimony due today but pound price action could be more sensitive to Brexit-related updates.

CHF

The franc chalked up some gains against its counterparts towards the end of the week as risk aversion was still in play, particularly in the European region. There were no reports out of the Swiss economy then and none are due today so market sentiment could keep pushing franc pairs around.

JPY

The yen had a mixed performance as the lack of top-tier data left it sensitive to currency-specific events. Earlier in the day, Japanese consumer confidence fell from 43.2 to 43.1 instead of improving to 43.7. There are no reports due from Japan today so yen pairs could keep reacting to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were the worst performers at the end of the week as the prospect of Fed tightening could dampen global demand and trade activity. Earlier today, Australia reported a 0.4% uptick in retail sales as expected and a 0.3% drop in its MI inflation gauge. The RBA statement is coming up in the next Asian session and a repeat of their earlier rhetoric could allow the currency to recover.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 07, 2017)

USD

The US dollar held on to most of its recent gains as January factory orders came in slightly better than expected at 1.2% versus 1.1%. This marks the second consecutive positive reading, signaling strong manufacturing activity down the line. US trade balance is due today and a wider deficit of $47 billion is eyed.

EUR

The euro lost a lot of ground when news broke out that Juppe won't be running for President in the upcoming elections. This led market watchers to fear that some of his supporters could give their votes to Le Pen, although her lead has been dropping against Macron. Euro zone retail PMI dipped from 50.1 to 49.9 to indicate contraction while the Sentix investor confidence index improved from 17.4 to 20.7.

GBP

The pound was also in a weak spot even though there were no major reports out of the UK economy yesterday. UK Halifax HPI is due today and a 0.4% rebound in house prices is eyed. Earlier today, the BRC retail sales monitor showed a 0.4% downtick, slower than the earlier 0.6% drop.

CHF

The franc seems to be resuming its slide against its peers, taking the brunt of the European uncertainty plays instead of the euro and the pound. SNB foreign currency reserves data is due today and an increase from the earlier 644 billion CHF figure could be evidence of slight intervention.

JPY

The yen had a mixed performance as it slid lower to the comdolls but advanced to the European currencies. There were no reports out of Japan yesterday and none are due today, indicating that the currency is reacting to country-specific events and market sentiment. Japanese final GDP and current account balance are due in the next Asian session.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly weaker against the dollar but they did manage to stem their declines against the euro and the pound. Australian retail sales came in line with expectations of a 0.4% uptick and traders are awaiting a relatively upbeat RBA statement today. Canadian Ivey PMI is due next and a rise from 57.2 to 58.9 is eyed while New Zealand will have its GDT auction in the latter part of the US session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 08, 2017)

USD

The US dollar held on to its recent gains, although the climb was slower. The headline trade balance showed a wider than expected deficit but components of the report indicated that both exports and imports picked up during the month. The ADP non-farm employment change reading is due today and this should provide some clues on how the Friday NFP might turn out. Analysts are expecting to see a 184K gain for the ADP report.

EUR

The euro gave back some of its recent gains as German factory orders printed a surprise 7.4% slump versus the projected 2.5% decline. The final GDP reading for the region was unchanged at 0.4%. German industrial production and French trade balance are up for release today.

GBP

The pound slid against most of its peers as the Halifax HPI printed a meager 0.1% uptick versus the projected 0.4% gain. The UK government annual budget release is scheduled today but traders could continue to look to Brexit-related headlines for cues.

CHF

The franc was in a weak spot against its peers as uncertainties in the European region dampened demand for the Swiss currency. Swiss foreign currency reserves increased from 648B CHF To 668B CHF to show a bit of intervention. Swiss CPI is due today and a 0.2% uptick is eyed, an improvement over the earlier flat reading.

JPY

The yen was able to hold on to its gains despite mixed data, as risk aversion was in play. The final GDP reading was upgraded from 0.2% to 0.3%, lower than the projected 0.4% expansion, while the current account balance printed a smaller surplus than expected. Average cash earnings data is due in the next Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Loonie shed some ground as the Ivey PMI printed a drop from 57.2 to 55.0 to show a slower pace of growth. In New Zealand, the GDT auction showed a 6.3% drop in dairy prices, adding to the earlier 3.2% slide. Chinese trade balance was also weaker than expected at a 60 billion CNY deficit versus the projected 173 billion CNY surplus. Crude oil inventories data is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 09, 2017)

USD

The US dollar raked in another round of gains when the ADP non-farm employment change figure beat expectations with a 298K versus the projected 188K figure. The previous report was also upgraded, hinting that the NFP could also have the same outcome. Initial jobless claims and import prices are up for release today but the focus is likely on the upcoming jobs release and next week's Fed meeting.

EUR

The euro gave up ground to the dollar but tried to consolidate against its peers when medium-tier reports from the bloc came in mixed. German industrial production rebounded by 2.8% but the French trade balance printed a wider than expected deficit. The ECB decision is coming up today and even though no policy changes are expected, Draghi's tone during the accompanying press conference could provide some clues on whether the central bank might be ready to taper or ease further.

GBP

The pound continued to slide in recent sessions even though there were no major reports out of the UK. There are no reports due today as well so pound price action could hinge on euro zone sentiment and overall market risk appetite.

CHF

The franc has been uneasy as it is also waiting for the ECB decision before deciding on a particular direction. Note that SNB officials have jawboned again recently and the foreign currency reserves showed a pretty notable increase, indicating that a bit of intervention may be in play. A dovish ECB statement could mean franc losses as well.

JPY

The Japanese yen lost ground to the dollar but managed to hold on to its gains against other counterparts as risk aversion stayed in play. Japanese average cash earnings posted a 0.5% gain versus the projected 0.3% figure while the previous reading was upgraded. Preliminary machine tool orders and the BSI manufacturing index are due next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were the biggest losers for the day, particularly the Loonie which was bogged down by the large increase in US crude oil stockpiles. The EIA report showed a buildup of 8.2 million barrels versus the projected increase of 1.1 million barrels. Earlier today, the Chinese CPI fell below expectations at 0.8% versus the projected 1.9% figure and the earlier 2.5% gain. PPI was stronger than expected at 7.8%, though.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 10, 2017)

USD

The US dollar is treading carefully ahead of today's NFP release. Analysts are expecting to see a 188K gain, lower than the earlier 227K increase, but leading indicators such as the ADP non-farm employment change are hinting at an upside surprise. Average hourly earnings could show a 0.3% gain, higher than the previous 0.1% uptick. Revisions to earlier data could also have a large impact on dollar action.

EUR

The euro staged a strong rally during the ECB statemet, as the central bank kept rates unchanged as expected but upgraded growth and inflation forecasts. During the presser, Governor Draghi said that there was no more urgency to ease as deflation risks are lower, signaling a shift to a less dovish bias. He also said that he isn't nervous about upcoming elections in Germany and France. French industrial production and Italian quarterly unemployment rate is due today.

GBP

The pound was able to trail the euro and cash in a few gains of its own as sentiment improved in the European region. There were no major reports out of the UK yesterday while today has the manufacturing and industrial production numbers due. Both are expected to post declines so a bit of pound weakness could be seen.

CHF

The franc was able to breathe a sigh of relief as the ECB didn't sound too dovish this time. This eases the pressure on the SNB to intervene in the currency markets to keep the franc weak against the euro. Swiss jobless rate was unchanged at 3.3% as expected. There are no reports due from the Swiss economy today so the franc could move to the tune of risk sentiment.

JPY

The yen continued to slide against its peers as traders are moving their funds back to the US dollar. Japan's BSI manufacturing index was weaker than expected at 1.1 versus the projected improvement from 7.5 to 8.4. There are no reports due from Japan today but the yen could be sensitive to dollar action after the NFP release.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still the weakest performers for the day as risk aversion stayed in play. Chinese CPI was weaker than expected at 0.8% versus the projected 1.9% figure. PPI was better than expected at 7.8% versus 7.6% signaling strong inflationary pressures later on. Canadian jobs data is also due today, with the headline reading expected to show a 4.8K decline in hiring. The unemployment rate is expected to stay unchanged at 4.8%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 13, 2017)

USD

The US dollar was able to end the week strong as the NFP report printed a stronger than expected 235K increase versus the estimated 188K gain and the earlier month's reading, which was upgraded from 227K to 238K. The unemployment rate dipped from 4.8% to 4.7% as expected but average hourly earnings was a notch short at 0.2% versus 0.3%. Only the Fed Labor Market Conditions Index is due today and traders are likely to position ahead of the FOMC rate increase.

EUR

The euro also kept up its climb until the end of the week as the shared currency got a strong boost from Draghi's less dovish tone during the ECB presser earlier on. Actual economic data was mostly subpar as the German trade balance, French industrial production, and Italian quarterly unemployment rate missed expectations. On the other hand, German WPI was stronger than expected at 0.5%. Italian industrial production is due, along with another speech by Draghi.

GBP

The pound was in a weak spot as European flows went to the euro and away from the UK currency. UK manufacturing production was weaker than expected with a 0.9% slide versus the projected 0.6% dip. Goods trade balance showed a smaller than expected deficit, though, which could be positive for trade and overall growth. There are no reports due from the UK today.

CHF

The franc had a mixed performance as it reacted mostly to country-specific events in the absence of top-tier reports from Switzerland. There are still no reports due from Switzerland today so risk sentiment could push the franc around.

JPY

The yen gave up ground to its peers as US bond yields rose and revived demand for the dollar. Over the weekend, Japan's core machinery orders report printed a weaker than expected 3.2% slide versus the projected flat reading while PPI came in at 1.0% as expected. Tertiary industry activity is due next and a 0.2% uptick is eyed.

Commodity Currencies (AUD, NZD, CAD)

Canada printed a stronger than expected employment change figure of 16.3K versus the projected 0.6K gain. This was enough to bring the unemployment rate down from 6.8% to 6.6%. Over the weekend, New Zealand reported a 0.2% uptick in its food price index, slower than the earlier 2.8% gain. There are no other reports due from the comdolls for today, but Chinese industrial production numbers are lined up for the next Asian session.

By Kate Curtis from Trader's Way