Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (May 22, 2017)

USD

Dollar weakness stayed in play for Friday as traders continued to worry about the repercussions of the investigation on Trump's intelligence information leak to Russia. There were no reports released from the US then so the focus was on political headlines, and it could be the same situation today. A couple of FOMC members are set to give testimonies and any shift to a less hawkish bias could influence Fed rate hike expectations for next month.

EUR

The euro managed to hold on to most of its gains at the end of last week as medium-tier data beat expectations. German PPI rose 0.4% versus the projected 0.2% uptick while the current account surplus turned out higher than expected. There are no major reports due today but the Eurogroup meetings will take place and discussions will likely focus on Brexit.

GBP

The pound ended the previous week strong but was off to a weak start today as the UK government said over the weekend that it is not willing to pay any bill that the EU charges relating to Brexit. UK Rightmove HPI advanced from 1.1% to 1.2% while the CBI industrial order expectations index advanced from 4 to 9 instead of staying unchanged. UK Prime Minister May has a speech today.

CHF

The franc had a mixed performance as the currency reacted mostly to currency specific events. There were no reports out of the Swiss economy on Friday and none are due today so sentiment flows could still be the main driver of franc pairs.

JPY

The yen gave back a few of its gains towards the end of the week, likely on profit-taking activity. Earlier today, the trade balance came in weaker than expected at 0.10 trillion JPY versus the consensus at 0.25 trillion JPY. To top it off, the earlier reading was downgraded to show a smaller surplus of 0.11 trillion JPY.

Commodity Currencies (AUD, NZD, CAD)

Economic data from Canada came in mostly weaker than expected, with headline CPI at 0.4% versus the 0.5% consensus and the core retail sales down 0.2% instead of posting the projected 0.2% uptick. Headline retail sales rose 0.7% versus the projected 0.4% gain, though. Canadian banks are closed for the holiday today so volatility could pick up closer to the BOC statement and OPEC meeting.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 23, 2017)

USD

The US dollar moved slightly lower against most of its peers, particularly the Kiwi. There have been no major reports out of the US while the FOMC speeches gave little assurance that a June hike is on the table. US flash manufacturing and services PMIs are lined up today, along with the new home sales report and Richmond manufacturing index. FOMC members Kashkari and Harker are scheduled for more speeches.

EUR

The euro managed to hold on to most of its gains so far this week even with resurfacing Greek debt headlines. Flash manufacturing and services PMI readings are due from Germany and France today, with more improvements expected. Strong readings could allow the shared currency to rake in more gains while disappointing results could push it back down.

GBP

The pound has been in a weak spot owing to concerns about Brexit negotiations and the snap elections. BOE Inflation Report hearings and UK public sector net borrowing data are lined up today so the focus could move back to economic data, although Brexit-related headlines could still influence price action.

CHF

The franc paused from its risk-off rallies after SNB head Jordan jawboned the currency last week. There have been no reports out of Switzerland yesterday and none are due today so currency-specific events or market sentiment could keep driving franc pairs around.

JPY

The yen is drawing some support from a pickup in risk aversion and dollar weakness. Reports of an explosion in the Manchester Arena in the UK have spurred geopolitical uncertainties once more during the Asian session. Japan's flash manufacturing PMI is lined up next and a pickup from 52.7 to 52.9 is expected.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi was the leading performer of the bunch as data from New Zealand have been mostly upbeat in the past weeks. The Loonie also got a bit of a boost from stronger expectations of a 9-month extension of the OPEC deal, with Kuwait and Iraq showing signs that they are likely to cooperate. New Zealand trade balance is due next and a narrower surplus is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 24, 2017)

USD

The US dollar regained some ground in recent trading as market watchers are shifting their focus back to economic data and June rate hike expectations. FOMC member Kashkari indicated that he's still on the fence, citing that jobs growth has been impressive but that inflation is heading the wrong way. Medium-tier US reports were mixed, with flash manufacturing PMI posting a surprise drop and the services PMI showing a stronger improvement. The Richmond manufacturing index and new home sales figures also disappointed. FOMC minutes are due today and any confirmation that a June rate hike is on the table could stoke the dollar's gains.

EUR

The euro managed to hold on to most of its recent gains as PMI reports came in mostly stronger than expected, except for the French flash manufacturing PMI. The German Ifo business climate index advanced from 113.0 to 114.6. German GfK consumer climate data is due today, ahead of a speech by ECB head Draghi. Cautious remarks from the central bank head could prevent the shared currency from extending its rallies.

GBP

The pound was one of the weaker performers of the bunch as traders are still reeling from the Manchester Arena attack. This adds to the uncertainty leading up to the snap elections and Brexit negotiations, especially since ISIS has claimed responsibility for the bombing. Public sector net borrowing and CBI realized sales data also disappointed. There are no reports due from the UK today.

CHF

The franc was able to hold on to some of its gains as risk appetite remained weak in the European region. Swiss trade balance was weaker than expected at a surplus of 1.97 billion CHF versus the projected 2.87 billion CHF figure. There are no reports due from Switzerland today so market sentiment could be responsible for the direction of franc pairs.

JPY

The yen slid slightly lower as traders renewed demand for the dollar ahead of the release of the May FOMC meeting minutes. Japanese data also turned out weaker than expected as the flash manufacturing PMI is down from 52.7 to 52.0 while the all industries activity index tumbled by 0.6% versus the projected 0.4% drop. There are no reports due from Japan today so risk sentiment could stay in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to hold their ground, with the Kiwi extending its flight. Canadian wholesale sales turned out weaker than expected with a 0.9% gain versus the projected 1.1% increase while New Zealand's trade balance churned out a larger than expected 578 million NZD surplus. Australia's quarterly construction work done fell 0.7% versus the projected 0.5% fall. The BOC statement and US crude oil inventories report are lined up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 25, 2017)

USD

The US dollar gave up ground after the May FOMC meeting minutes didn't seem as hawkish as expected. Although majority of members confirmed that a rate hike is appropriate soon, they also cited that it would be prudent to wait for more data to see if the slowdown in Q1 was really transitory. Apart from that, the discussions focused on balance sheet rebalancing, which might lessen the need for additional tightening moves down the line. US existing home sales came in below expectations at 5.57 million. Initial jobless claims, goods trade balance, and preliminary wholesale inventories are due today.

EUR

The euro recovered to the dollar but was stuck in consolidation against the commodity currencies. Data came in stronger than expected once more as the German GfK consumer climate index rose from 10.2 to 10.4 instead of holding steady. French and German banks are closed for the holiday today so liquidity could be lower than usual during the London session.

GBP

The pound was still in a weak spot against most of its peers as the terror threat in the UK weighed heavily on investor sentiment. There were no reports out of the UK then while today has the second estimate GDP reading, preliminary business investment data, and the BBA mortgage approvals. No revisions are expected for the growth figure but an upgrade could yield some gains for the British currency.

CHF

The franc had a mixed performance as it mostly reacted to currency-specific events. There were no reports out of Switzerland yesterday and none are due today as Swiss banks are closed for the holiday, leaving market sentiment as the likely driver of price action for franc pairs.

JPY

The yen is also in a weak spot as risk appetite appears to have improved. There were no reports out of Japan yesterday and none are due today so the same market factors could stay in play. National and Tokyo core CPI readings are due in the next Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the top performers thanks to a more optimistic BOC statement. The central bank focused on the improvements in hiring and consumer spending, confirming that their monetary policy stance is still appropriate. Moody's downgraded China's outlook but the Aussie seems unnerved as it is currently taking advantage of gold rallies. Crude oil stockpiles fell by 4.4 million barrels, according to the EIA report, and the focus is now on the OPEC meeting.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 26, 2017)

USD

The US dollar barely established a clear direction in recent trading sessions as medium-tier reports were mixed. Initial jobless claims landed at 234K from 233K, still lower than the 238K consensus. Preliminary wholesale inventories slid 0.3% instead of showing a 0.2% buildup to indicate stronger demand and likely rising business production later on. However, the goods trade balance revealed a larger deficit of $67.6 billion on higher imports and lower exports, particularly of automotives and consumer goods. The US preliminary GDP reading is due today and a slight upward revision to 0.9% is eyed.

EUR

The euro was able to hold its ground and even take advantage of the dip in commodities. Most European banks were closed for Ascension Day yesterday so liquidity was low. There are no reports due from the euro zone today, which suggests that market sentiment or currency-specific action could push euro pairs around.

GBP

The pound took in some heavy hits after the UK GDP reading was downgrade from 0.3% to 0.2% to suggest that the economy might not be as resilient as many expect. However, preliminary business investment still beat expectations with a 0.6% gain versus the projected 0.3% uptick. There are no reports due from the UK today so traders might focus on Brexit-related headlines.

CHF

The franc regained ground as European currencies and commodities were weaker for the most part of the day. Swiss banks were closed for the holiday yesterday so there were no reports printed then and none are due today, leaving market sentiment in the driver's seat.

JPY

The yen took advantage of the fall in commodities even as a bit of risk appetite returned in the US session. National and Tokyo core CPI readings are lined up today, with the former expected to rise from 0.2% to 0.4% and the latter likely to show a flat reading after the previous 0.1% dip.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up a lot of ground as commodities tumbled after the OPEC decision. The cartel agreed to a 9-month extension of their output deal as expected, without any additional adjustments in production levels or requiring exempted member nations to join in the output cuts. Saudi's energy minister urged US shale oil producers to moderate their output as well. There are no other reports due from the comdoll economies for the rest of the week.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 29, 2017)

USD

The US dollar gained some support from mostly stronger than expected economic reports. In particular, its Q1 GDP reading was upgraded from 0.7% to 1.2% versus the 0.9% consensus, signaling that the "slowdown" in the period wasn't all that worrisome. Durable goods orders posted a 0.7% drop versus the projected 1.4% slide but the core version disappointed with a 0.4% drop instead of the estimated 0.4% uptick.

EUR

There were no economic reports released from the euro zone economies on Friday while today has only M3 money supply and private loans data. ECB head Draghi also has a testimony lined up and a less cautious tone than usual could mean more support for the shared currency.

GBP

There were also no major reports out of the UK on Friday but traders seem to be wary of the upcoming snap elections and the possibility that May could lose. UK banks are closed for the holiday today so liquidity could be lower and there are no reports due.

CHF

The franc had a mixed performance as it mostly reacted to currency-specific events. There were no reports printed out of Switzerland on Friday and none are due today so overall market sentiment could push franc pairs around and the lack of any big catalysts could keep consolidation in play.

JPY

The yen barely reacted to mixed inflation reports from Japan. The national core CPI ticked 0.3% higher versus the projected 0.4% uptick while the Tokyo core CPI advanced from -0.1% to 0.1% instead of staying flat. There are no reports due from the Japanese economy next so market sentiment could be the main driver of yen pairs' action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained some ground as traders priced in the longer-term impact of the OPEC agreement to extend their output deal by nine months. Chinese banks are closed for the holiday today so liquidity could be lower than usual and there are no reports due from the comdoll economies

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 30, 2017)

USD

The US dollar was barely moving in recent trading sessions as traders were out enjoying Memorial Day. There were no reports out of the US economy then while today has the core PCE price index, as well as personal spending and income data. The CB consumer confidence index is also lined up and a dip from 120.3 to 120.1 is eyed.

EUR

The euro took a hit after ECB head Draghi's testimony, even as he did have upbeat remarks on the economy. He acknowledged that economic risks have subsided and that the threat of deflation is lower than before. However, Draghi also mentioned that the economy needs an "extraordinary" amount of support, weighing on the shared currency. German import prices, preliminary CPI, French consumer spending, and French preliminary GDP are due today.

GBP

The pound recovered from its recent slide after the ComRes poll reflected a wider 12-point lead for May's Conservative Party compared to the YouGov poll indicating a mere 5-point gap. This suggests that the UK economy could avoid additional political uncertainty ahead of the Brexit negotiations. There were no reports out of the UK yesterday and none are due today.

CHF

The franc had a mixed performance as it reacted to currency-specific events. There were no reports out of Switzerland yesterday while today has the KOF economic barometer due. An improvement from 106.0 to 106.2 is expected, possibly adding support for the franc.

JPY

The yen also had a mixed performance as it simply reacted to market sentiment. Household spending, retail sales, and the BOJ core CPI reading are due today. Household spending could fall by 0.7% versus the earlier 1.3% slide while retail sales might increase from 2.1% to 2.1%.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to hold on to their recent gains and go for more against the euro. There were no reports out of the comdoll economies yesterday while today has the current account balance and underlying inflation data from Canada. Strong figures could underscore the BOC's relatively confident stance and allow the Loonie to keep advancing.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (May 31, 2017)

USD

The US dollar scored a few gains when the core PCE price index printed a larger than expected 0.2% gain versus the projected 0.1% uptick. Personal income and spending both posted 0.4% gains as expected while the CB consumer confidence index for May surprised with a tumble from 119.4 to 117.9 instead of improving to 120.1. Chicago PMI, pending home sales, and the Fed Beige Book are lined up next.

EUR

The shared currency moved mostly sideways even as economic data turned out weaker than expected. German import prices ticked 0.1% down instead of posting the projected 0.2% uptick while preliminary CPI fell by 0.2% versus the projected 0.1% dip. French consumer spending increased by 0.5%, short of the projected 0.8% gain, while the Spanish flash CPI also fell short. German retail sales and unemployment change, as well as French preliminary CPI, are lined up today.

GBP

The pound suffered a sharp selloff in the latter trading sessions when a YouGov poll reflected a narrowing lead for the Conservative Party, also indicating that it would fall short of securing the majority by 16 seats. There were no reports out of the UK economy yesterday while today has medium-tier reports such as net lending to individuals and mortgage approvals data lined up.

CHF

The franc was also in a weak spot as sentiment in Europe appears to have turned sour. Also, the Swiss KOF economic barometer fell from 106.3 to 101.6 versus the projected 106.2 reading. The Swiss UBS consumption indicator is due next and another weaker than expected read could mean more franc weakness.

JPY

The yen had a mixed performance as it functioned more of a counter currency instead of setting its own direction. The BOJ core CPI posted a 0.2% uptick, representing a rebound over the earlier 0.1% drop. Preliminary industrial production is due next and a 4.2% rebound is eyed.

Commodity Currencies (AUD,NZD, CAD)

The Loonie turned lower as economic data from Canada came out weaker than expected. The current account deficit widened from 11.8 billion CAD to 14.1 billion CAD while the underlying inflation readings came in below consensus. According to the RBNZ, financial risks are subsiding and upward pressures to home prices are lower. Chinese official PMI readings are due next and another round of declines could mean more weakness for the comdolls.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 01, 2017)

USD

The dollar was barely able to establish a clear direction in recent trading as economic data came in mixed. The Chicago PMI surprised with a jump from 58.3 to 59.4, outpacing the consensus at 57.0 to reflect a much stronger pace of industry expansion. The Fed Beige Book showed that most districts saw moderate growth but the pending home sales report printed a 1.3% slump instead of the projected 0.7% uptick.

EUR

The euro managed to score some wins versus the comdolls and the pound even as flash CPI readings from the region turned out weaker than expected. The headline reading came in at 1.4% versus the 1.5% forecast and the earlier 1.9% increase while the core reading landed at 0.9% versus 1.0% from the previous 1.2% gain. The region's jobless rate improved from 9.4% to 9.3% though. Final manufacturing PMI readings from its top economies are due next.

GBP

The pound took another hit when a poll from The Sun indicated a narrower lead for Theresa May's Conservative Party. It showed a 44% stronghold for Conservatives and 38% for Labour. UK net lending to individuals was also weaker than expected at 4.3 billion versus the 4.5 billion consensus. UK manufacturing PMI is due next and a dip from 57.3 to 56.5 is expected.

CHF

The franc barely budged when SNB head Jordan started jawboning again. He mentioned that an overvalued franc puts pressure on the Swiss economy but franc traders don't seem to be bothered until they see actual central bank action. The Credit Suisse Economic Expectations index is up from 22.2 to 30.8 and the Swiss manufacturing PMI is due next.

JPY

The yen was able to hold on to its recent gains as risk aversion stayed in play. Japanese capital spending data is due next and a 3.9% figure is eyed, slightly higher than the earlier 3.8% read. The final manufacturing PMI is also due but no changes to the initial 52.0 estimate is expected.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were slightly weaker even after Canada printed a higher than expected monthly GDP growth of 0.5% versus 0.3% in March. Oil prices remain under pressure ahead of inventory data from API and EIA. Australia has its private capital expenditure data and retail sales figures due next, along with China's Caixin manufacturing PMI. New Zealand is due to print its quarterly overseas trade index as well.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 02, 2017)

USD

The dollar got a boost from upbeat leading jobs indicators, namely the ADP employment change and ISM manufacturing PMI. The former climbed from 174K to 253K, outpacing the consensus at 181K, while the latter ticked up from 54.9 to 54.9 instead of dipping to the consensus at 54.7. Underlying component showed a rise in hiring activity and a decline in prices. The NFP report is due next, and this is expected to show a 181K reading and no change in the jobless rate at 4.4%.

EUR

The euro was able to hold on to most of its gains even with mixed data from the region. French and Italian manufacturing PMI came in weaker than expected while the Spanish manufacturing PMI beat expectations. The region's PPI and the Spanish unemployment change report are lined up today.

GBP

The pound struggled to stay afloat as more polls indicated a narrowing lead for PM May's Conservative Party, keeping political uncertainty in play. The UK manufacturing PMI is down from 57.3 to 56.7 versus the projected drop to 56.5. The construction PMI is up for release next and a drop from 53.1 to 52.7 is expected.

CHF

The franc had a mixed performance as it reacted mostly to currency-specific events. The Swiss manufacturing PMI is down from 56.2 to 55.1 to reflect a slower pace of industry growth compared to the projected 56.1 figure. There are no reports due from the Swiss economy today.

JPY

The yen also had a mixed performance as it was sensitive to market sentiment and currency-specific events. Data from Japan was stronger than expected, with capital spending up 4.5% versus 3.9% in Q1 and the final manufacturing PMI upgraded from 52.0 to 53.1. The Japanese consumer confidence index is due next and a rise from 43.2 to 43.6 is expected.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground to the dollar and euro but managed to hold steady against the pound. Crude oil steadied as the EIA report showed a draw of 6.4 million barrels in stockpiles versus the projected decline of 2.7 million barrels. The Canadian trade balance is due next and flat reading is eyed.

By Kate Curtis from Trader's Way