Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (May 08, 2017)

USD

The Greenback didn't post much gains on Friday even after economic data turned out stronger than expected. The NFP report indicated a 211K increase in hiring versus the projected 194K figure.
However, there were downward revisions to earlier reports. The jobless rate improved from 4.5% to 4.4% instead of rising to the estimated 4.6% reading while average hourly earnings increased 0.3% as expected. Only the labor market conditions index is due today and a rise from the earlier 0.4 figure could be bullish for the dollar.

EUR

The euro gapped up again over the weekend as the French elections confirmed a clear win for Macron, which would mean stability for France and the euro zone. On Friday, euro zone retail PMI improved from 49.5 to 52.7 as well. German factory orders data is due today and a 0.7% uptick is eyed. Sentix investor confidence data is also lined up and an improvement from 23.9 to 25.3 is expected.

GBP

The pound held on to most of its gains against its peers, except against the Loonie. There were no reports out of the UK economy on Friday but traders are still feeling optimistic after the industry PMI readings turned out stronger than expected. Halifax HPI is due today but traders could just price in expectations ahead of the BOE Super Thursday.

CHF

The franc had a mixed run as it reacted mostly to currency-specific events. SNB foreign currency reserves ticked up from 683B CHF to 696B CHF, indicating that the central bank might be acting to keep the currency weak. There are no reports due from the Swiss economy today.

JPY

The yen gapped down against the European currencies once more as risk-taking is present. However, these gaps were quickly filled as traders booked profits almost instantly. Japan's consumer confidence index is due today and a rise from 43.9 to 44.3 to reflect a pickup in optimism is expected.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed run as the Aussie was still reeling from weaker iron ore prices while the Loonie was able to benefit from slightly stronger than expected data. Canada added 3.2K jobs in April versus the estimated 20K gain while the unemployment rate improved from 6.7% to 6.5%. The Ivey PMI climbed from 61.1 to 62.4, a notch up from the 62.3 consensus. Earlier today, Australia reported a surprise 13.4% slump in building approvals and China's trade balance is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 09, 2017)

USD

The US dollar regained ground as the Fed labor market conditions index saw an upgrade for the March report while traders turned their attention to Wall Street reform. The Treasury Committee headed by Mnuchin had a closed-door meeting to discuss the efficacy of the Volcker Rule as part of Trump's order to conduct a review of the financial industry. Only medium-tier reports such as JOLTS job openings and final wholesale inventories are lined up today.

EUR

The euro returned its recent wins after the French elections as traders now turned their attention to the parliamentary election and whether or not Macron's party can get majority of the seats. Data turned out stronger than expected with German factory orders up 1.0% versus the projected 0.7% gain, but this is slower than the previous 3.5% increase. Sentix investor confidence also beat expectations. German industrial production and trade balance, along with Italian retail sales, are up for release today.

GBP

The pound continued to advance against its peers even with no major reports out of the UK yesterday. Earlier today, the BRC retail sales monitor printed a strong 5.6% rebound from the earlier 1.0% decline. There are no other reports due today and traders seem to be gearing up for the BOE Super Thursday.

CHF

The franc had a mixed performance as it mostly reacted to currency-specific events in the absence of top-tier data from Switzerland. Only the Swiss jobless rate is due today and a drop from 3.3% to 3.2% is eyed so the franc might be able to gain a bit more support.

JPY

The yen caved under risk appetite, particularly to the European currencies. Japanese average cash earnings printed a surprise 0.4% drop versus the projected and earlier 0.4% uptick. Consumer confidence was also weaker than expected at 43.2 versus the 44.3 consensus and the earlier 43.9 figure. Japanese leading indicators is due next but the yen could stay sensitive to market sentiment and US bond yields.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to make a bit of a rebound against their lower-yielding counterparts on a slight pickup in risk appetite or profit-taking. China's trade balance printed stronger than expected headline results but the pickup in imports and exports fell short of estimates. Australia's retail sales report churned out a 0.1% decline earlier today, setting a three-month streak of negative readings. Canadian building permits is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 10, 2017)

USD

The dollar gained a bit of support even with a couple of weaker than expected medium-tier data. Final wholesale inventories ticked 0.2% higher instead of falling by 0.1% in March while the IBD/TIPP economic optimism index ticked lower on a weaker six-month outlook. A bit of risk aversion stemming from geopolitical conflict with North Korea kept the safe-haven currency supported. There are no major reports lined up today so political headlines could influence dollar movement.

EUR

The euro extended its gains against most of its peers even with mixed data from the region. German industrial production fell 0.4% versus the projected 0.6% dip while the trade surplus narrowed from 21.2 billion EUR to 19.6 billion EUR. Italian retail sales was flat instead of posting the estimated 0.2% uptick. ECB head Draghi has a speech today and Italian and French industrial production numbers are due.

GBP

The pound was one of the biggest winners in recent trading sessions as traders appear to be pricing in an upbeat BOE announcement on Thursday. There were no major reports out of the UK recently, but last week's set indicated resilience among the business sectors since PMI turned out stronger than expected.

CHF

The franc gave up some ground to its peers but managed to hold steady against the commodity currencies. The Swiss jobless rate was unchanged at 3.3% instead of improving to the projected 3.2% figure. There are no major reports due from Switzerland today.

JPY

The yen was the biggest loser in the past sessions as the threats from North Korea weighed heavily on sentiment in the Asian region. According to the country's ambassador to the UK, they are gearing up for another nuclear test and that they are prepared to attack the US if necessary. Japan's leading indicators is due next and an improvement is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were stuck mostly in consolidation as traders are waiting for the next catalysts. The API reported its largest draw in stockpiles this year, lending some support for CAD. Chinese CPI was better than expected at 1.2% but PPI fell short of estimates at 6.4% versus 6.8%. EIA crude oil inventories and the RBNZ statement are due next. No actual rate changes are eyed from the RBNZ.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 11, 2017)

USD

The Greenback remained mostly supported by upbeat medium-tier US data and a bit of risk aversion. Fed official Rosengren reiterated his view that three more rate hikes seem reasonable this year and even though he's not a voting member, US markets and bond yields closed mostly higher on these remarks. US PPI and jobless claims are due next, providing a clue of how Friday's CPI reports might turn out.

EUR

The euro returned some of its recent wins even with mostly strong reports from the region. French industrial production rose 2% versus the estimated 1.2% increase while Italian industrial production ticked 0.4% higher. ECB head Draghi's remarks dampened the shared currency's gains as he remained cautious about confirming a pickup in inflation and signaling tapering down the line. The ECB Economic Bulletin and EU economic forecasts are due next.

GBP

Sterling remained one of the strongest performing currencies as traders are lining up their positions for the BOE Super Thursday. No actual policy changes are expected but many are expecting to hear optimistic remarks, especially since the latest batch of PMI readings have surprised to the upside. Any shift in bias could mean strong action for the pound as the minutes would also shed some light on how most policymakers are leaning.

CHF

The franc gave up some ground to most of its peers as there were no reports from Switzerland to give it a boost. Swiss CPI is due today and another 0.2% uptick is eyed, although a stronger than expected read could revive franc gains.

JPY

The yen continued to give up ground as traders moved their safe-haven holdings to the dollar on rising US bond yields. At the same time, tensions in North Korea are keeping a lid on the Asian currency's rally. Bank lending came in at 3.0% in Japan, unchanged from the earlier reading instead of improving to the consensus at 3.2%.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance as the Kiwi tanked after the RBNZ decision and a bit of jawboning. The Loonie raked in more gains as the EIA report showed a draw of 5.2 million barrels in stockpiles versus the projected reduction of 2 million barrels. Russia has also expressed willingness to join in the OPEC output deal if it is extended for another 6-9 months.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 12, 2017)

USD

The dollar chalked up a few wins earlier in the day but gave these back in the US session even with upbeat reports. Headline PPI ticked 0.5% higher while the core version of the report indicated a 0.45 gain versus the projected 0.2% uptick. For today, CPI and retail sales figures are due. Headline CPI is expected to post a 0.3% rebound while core CPI could advance by 0.2%. Headline retail sales could indicate a 0.6% increase while the core version could print a 0.5% uptick.

EUR

The euro continued to retreat against its peers as traders booked profits after ECB Governor Draghi recently shared a cautious outlook for the region. There were also no major reports to give the shared currency a boost yesterday while today has German preliminary GDP and final CPI data on tap. Euro zone industrial production is also due and a 0.3% rebound is eyed.

GBP

The pound returned most of its recent gains as traders were disappointed to find out that the BOE was not as hawkish as expected. The central bank kept monetary policy unchanged for the time being but cautioned that Brexit risks could weigh on the consumer sector as wage growth could have trouble keeping up with rising price levels. There are no reports due from the UK today.

CHF

The franc was stuck in consolidation as the Swiss CPI simply came in line with expectations of a 0.2% uptick. There are no reports due from the Swiss economy today so more sideways action could be seen or the franc could be sensitive to market sentiment.

JPY

The yen was able to regain ground against the dollar and European currencies even as Japan's medium-tier reports came in mixed. Bank lending and current account balance printed weaker than expected results but the Economy Watchers Sentiment index improved from 47.4 to 48.1. There are no reports due from Japan today so yen pairs could take their cue from US bond yields.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to hold on to their gains even after the OPEC monthly report projected higher output from non-OPEC members and kept its demand forecast unchanged. There are no major reports due from the comdoll economies today but New Zealand has its quarterly retail sales numbers due over the weekend.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 15, 2017)

USD

The dollar gave back some of its gains earlier in the week when Friday's set of reports turned out disappointing. Headline CPI came in at 0.2% versus 0.3% while core CPI printed a meager 0.1% uptick. Headline retail sales increased 0.4% versus 0.6% while core retail sales advanced by 0.3% versus 0.5% to signal that the consumer sector is not that strong yet. Only the Empire State manufacturing index is due today and a rise from 5.2 to 7.2 is eyed.

EUR

The euro was able to advance against most of its counterparts on Friday as European traders moved their holdings away from the pound on a disappointing UK Super Thursday. German preliminary GDP came in line with expectations of a 0.6% expansion while euro zone industrial production was slightly weaker than expected. There are no reports due from the region today.

GBP

The pound was still in a weak spot after the BOE Super Thursday disappointed earlier in the week. There were no reports out of the UK on Friday and none are due today, but UK PM May has a testimony due and any Brexit-related remarks could push pound pairs around.

CHF

The franc managed to gain ground against most of its rivals as the pound weakened and a bit of risk aversion returned. There were no reports out of the Swiss economy then and today has the PPI due. Analysts are expecting to see a flat reading after the earlier 0.1% uptick.

JPY

The yen regained some ground as traders moved out of the dollar on disappointing CPI and retail sales figures from the US. Japan's PPI turned out stronger than expected with a 2.1% gain versus the estimated 1.8% increase. There are no other reports due from Japan today so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly weaker for the day, although the Kiwi managed to put up a fight on stronger than expected quarterly retail sales data printed over the weekend. The headline figure rose 1.5% versus the projected 1.1% gain while the core reading increased by 1.2% versus the 0.9% consensus.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 16, 2017)

USD

The dollar was slightly weaker for the day after the Empire State manufacturing index slid from 5.2 to -1.0 instead of improving to 7.2. Underlying data showed declines in new orders and shipments, casting some doubt on June rate hike forecasts. Building permits and housing starts, along with industrial production and capacity utilization, are lined up from the US today and another batch of weak results could undermine dollar strength.

EUR

The euro resumed its climb against most of its counterparts as more signs of political stability have been emerging in the region. There were no reports out of the euro zone yesterday so traders are looking to the odds of Merkel winning the German elections. For today, German ZEW economic sentiment and euro zone flash GDP data are due with another 0.5% growth figure expected.

GBP

The pound was slightly weaker for the day as Prime Minister May's Facebook Live event provided little assurance for bulls. Instead, traders are now exercising some caution ahead of the top-tier data releases such as the CPI, jobs figures, and retail sales. Inflation reports are expected to show more upside, with headline CPI likely to advance from 2.3% to 2.6% and the core reading expected to climb from 1.8% to 2.2%.

CHF

The franc was able to benefit from risk-off flows in recent trading sessions as traders remained reluctant to buy the dollar and yen. However, Swiss PPI turned out weaker than expected with a 0.2% drop versus the projected flat reading and the earlier 0.1% uptick. There are no reports due from the Swiss economy today so market sentiment and currency-specific flows could be the main drivers.

JPY

The yen was on slightly weaker footing as traders are keeping close tabs on the North Korea situation. Japanese PPI was stronger than expected at 2.1% versus 1.8% and today has the tertiary industry activity index due. An uptick of 0.1% is expected, slower than the earlier 0.2% increase.

Commodity Currencies (AUD, NZD, CAD)

The Loonie got a bit of a boost on talks between Saudi Arabia and Russia. Energy ministers from both nations agreed to support an extended output deal until March 2018 in order to keep prices afloat. However, weaker risk appetite remains in play after China printed weak industrial production, retail sales, and fixed asset investment reports. New Zealand's GDT auction and quarterly producer prices data are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 17, 2017)

USD

The US dollar gave up some ground to its peers as equity indices and bond yields slid lower on national security issues with the Trump administration. Economic data has been mixed, with building permits and housing starts falling short of estimates while industrial production and capacity utilization reflected optimism in the business sector. There are no major reports due from the US economy today so the focus could remain on developments in Washington regarding the intelligence leak to Russia.

EUR

The euro was able to cash in on mostly stronger than expected medium-tier data. The region's flash GDP reading came in line with expectations of 0.5% growth while Germany's ZEW economic sentiment showed a weaker than expected climb from 19.5 to 20.6 versus the consensus at 22.3. Euro zone trade balance and the region's ZEW index came in better than expected. The Italian trade balance and euro zone final CPI readings are lined up today.

GBP

The pound had a volatile run as it initially rallied on stronger than expected UK CPI then gave up ground when traders realized the repercussions on consumer spending. Headline CPI advanced from 2.3% to 2.7% while core CPI rose from 1.8% to 2.4% to suggest that purchasing power could weaken. Jobs data is due next and a drop in claimants is eyed, although the focus is likely on the average earnings index and whether or not wage growth could stay in pace with rising price levels.

CHF

The franc was the big winner for the day as it took the lion's share of risk-off flows from the dollar and the yen. There were no reports out of the Swiss economy and none are due today but the currency could continue to benefit if market uncertainties remain in play.

JPY

The yen was also able to squeeze out some gains to the dollar and its higher-yielding peers as US bond yields weakened. However, data from Japan has been far from impressive since the core machinery orders figure came in at 1.4% versus the projected 2.6% increase and the earlier 1.5% gain. Revised industrial production data is due next and no change to the preliminary 2.1% decline is expected.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened to the euro, franc, and yen but managed to hold steady against the pound and the dollar. New Zealand quarterly PPI input and output prices turned out stronger than expected while the GDT auction yielded a 3.2% gain in dairy prices. API data revealed a buildup in inventories and the EIA data due today is expected to print a draw of 2.5 million barrels.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 18, 2017)

USD

The dollar was barely able to benefit from risk-off flows as concerns about the Trump administration remained in the spotlight. The US Justice Department ordered an official investigation on the alleged information leak to Russia so market watchers are worried that this could delay fiscal reforms. There were no major reports out of the US economy yesterday while today has initial jobless claims and the Philly Fed index.

EUR

The euro extended its climb against most of its major counterparts as medium-tier data turned out upbeat. Final CPI readings were unchanged from their flash figures, which indicated gains over the previous month. Italian trade balance showed a much wider surplus of 5.42 billion EUR compared to the consensus at 1.97 billion EUR. There are no major reports due from the region today.

GBP

The pound was able to hold on to most of its wins when UK jobs data came in better than expected. Claimant count change was at 19.4K in April, although the earlier reading showed a downgrade to 33.5K in joblessness. Even so, the unemployment rate improved from 4.7% to 4.6% while the average earnings index rose from 2.3% to 2.4% as expected to reflect wage growth. UK retail sales is due today and a 1.2% rebound from the earlier 1.8% drop is eyed.

CHF

The franc was able to rally again on risk aversion but stopped short of its climb when SNB head Jordan reiterated that they're ready to intervene in the currency market if necessary. There were no reports out of the Swiss economy yesterday and none are due today so market sentiment could dictate franc price action.

JPY

The yen was the biggest winner for the day as it took advantage of both anti-dollar price flows and risk aversion. Earlier today, Japan also printed stronger than expected GDP growth of 0.5% versus the estimated 0.4% expansion and the earlier 0.3% uptick. However, the preliminary GDP price index reflected a steeper drop of 0.8% versus the estimated 0.7% decline.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up a lot of ground as risk aversion was still in play yesterday. However, the Aussie made a bit of a bounce on stronger than expected jobs data, as the employment change figure came in at 37.4K versus the 4.5K consensus while the unemployment rate improved from 5.9% to 5.7%. EIA crude oil inventories were down 1.8 million barrels versus 2.5 million barrels but still enough to ease some oversupply concerns. Canadian foreign securities purchases and NZ visitor arrivals data are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 19, 2017)

USD

The dollar recovered against its peers on strong medium-tier data and indications that former FBI director Comey was not pressured to stop his investigation into alleged information leaks to Russia. Initial jobless claims landed at 232K versus the 240K consensus while the Philly Fed index posted a surprise gain from 22.0 to 38.8.

EUR

The euro was either stuck in consolidation or reacting to currency-specific events since their were no major reports out of the region yesterday. The ECB meeting minutes contained a few cautious remarks but the recent upside surprises in data points kept the shared currency afloat. German PPI and euro zone current account balance are due today.

GBP

The pound had a volatile run as it enjoyed a strong boost from impressive UK retail sales data then returned its gains and more later in the day. Consumer spending rebounded by 2.3% in April versus the projected 1.2% gain while the previous reading was upgraded from an initially reported 1.8% drop to a smaller 1.4% decline. Only the CBI industrial order expectations index is due today.

CHF

The franc paused from its recent climb as risk appetite appeared to return to the markets. There were no major reports out of Switzerland yesterday and none are due today so the Swiss currency could stay sensitive to risk flows.

JPY

The yen gave back some ground to the dollar when US equities and bond yields recovered. There were no major reports out of Japan recently so the lower-yielding currency is also reacting to risk sentiment and could continue to do so for the rest of the trading week.

Commodity Currencies (AUD, NZD, CAD)

The comdolls tossed and turned on account of changes in market sentiment. Australian employment change rose by 37.4K versus the 4.5K consensus while the jobless rate improved from 5.9% to 5.7%. Canadian foreign securities purchases came in below expectations while credit card spending and visitor arrivals in New Zealand increased at a faster pace. Canadian CPI and retail sales figures are due next.

By Kate Curtis from Trader's Way