Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Jun 05, 2017)

USD

The dollar sold off heavily on Friday when the NFP reading fell short of estimates, casting doubts on a June hike. The economy added 138K jobs in May versus the projected 181K increase and the earlier reading, which was downgraded to 174K. The unemployment rate improved from 4.4% to 4.3% while the average hourly earnings figure printed a 0.2% uptick as expected. US ISM non-manufacturing PMI is due today and a drop from 57.5 to 57.1 is eyed.

EUR

The euro was still mostly weaker for the day after the region's PPI reading showed a flat reading versus the 0.2% uptick to indicate weaker price pressures down the line. Most European banks are closed in observation of Whit Monday today but final services PMI readings are still lined up.

GBP

The pound is off to a shaky start owing to the fresh round of attacks in London and the upcoming snap elections. Polls could have a major impact on the currency's direction for the week and additional volatility is expected. UK services PMI is due today and a fall from 55.8 to 55.1 is expected.

CHF

The franc gave up some of its recent wins as the SNB continued to jawbone the currency. There were no reports released from Switzerland on Friday and none are due today since Swiss banks are closed for the holidays.

JPY

The yen took advantage of dollar weakness on Friday as bond yields tumbled upon seeing the NFP report. Japan's consumer confidence index improved from 43.2 to 43.6 as expected and there are no reports due from Japan today so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained ground versus the dollar but were still weak against the yen. Data from Canada, namely trade balance and labor productivity data, turned out weaker than expected. New Zealand banks are closed for the holiday while Australia just reported a drop in its AIG services index from 53.0 to 51.5.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 06, 2017)

USD

The US dollar managed to stay afloat despite mostly downbeat medium-tier data. The ISM non-manufacturing PMI slid from 57.5 to 56.5, lower than the projected drop to 57.1. The final services PMI by Markit was downgraded from 54.0 to 53.6 to reflect a weaker pace of expansion as well. Only the JOLTS job openings report is due from the US today.

EUR

The euro was in a weak spot against its peers as final services PMI weren't so upbeat. Most euro zone banks were also closed in observance of Whit Monday. Euro zone retail PMI and Sentix investor confidence data are due today and another round of downbeat results could mean more euro weakness.

GBP

The pound tossed and turned as traders kept close tabs on polls leading up to the elections on June 8. The latest batch showed a bit of a higher lead for the Conservatives, which could mean more political stability and a stronger negotiating front during the Brexit talks. UK services PMI was weaker than expected as it fell from 55.8 to 53.8 versus the 55.1 consensus.

CHF

The franc was still in a weak spot as traders hesitated to put funds in Europe and for fear of SNB intervention. Swiss banks were also closed on Whit Monday so there were no reports out of Switzerland then. There are also no reports due today so franc price action could hinge on market sentiment.

JPY

The yen was able to hold on to most of its gains even as US bond yields recovered. There were no reports released from Japan at the start of the week while today has the average cash earnings figure. A 0.3% uptick is eyed, which would be an improvement over the earlier flat reading.

Commodity Currencies (AUD, NZD, CAD)

Crude oil was under some selling pressure as the rift in the Middle East threatens to make the OPEC deal more challenging to implement. Data from Australia has been mixed, with the AIG services index falling and the MI inflation gauge printing a weaker reading as well. The RBA statement is coming up next and no rate changes are eyed, but the central bank could continue to express caution about employment and inflation. Canada's Ivey PMI and New Zealand's GDT auction are lined up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 07, 2017)

USD

The US dollar was unable to benefit from stronger than expected JOLTS job openings data as traders are feeling uneasy ahead of Comey's testimony on Thursday. This could have repercussions on the pace of fiscal reforms or if any are set to be implemented at all. Only the US consumer credit report is lined up today.

EUR

The euro was under a bit of selling pressure against the yen and comdolls but it managed to advance versus the dollar and pound. Euro zone retail PMI fell from 52.7 to 52.0 but the Sentix investor confidence index improved from 27.4 to 28.4, outpacing the consensus at 27.6. German factory orders and Italian retail sales are due today.

GBP

The pound struggled to stay afloat as traders are keeping extra close tabs on opinion polls leading up to the actual elections later this week. The UK BRC retail sales monitor also printed a 0.4% dip after showing a strong 5.6% surge last time. UK Halifax HPI is due next and a 0.2% fall is eyed.

CHF

The franc had a mixed run as it reacted mostly to currency-specific events. There were no reports out of Switzerland yesterday while today has the SNB foreign currency reserves on tap. A significant increase over the earlier 696 billion CHF level could be evidence of intervention, especially since Chairman Jordan has jawboned heavily in the past couple of weeks.

JPY

The yen was the strongest performer as it benefitted from risk-off moves and anti-dollar sentiment. News that China will be buying US bonds drove prices higher and yields lower, which then lifted demand for the yen. Average cash earnings also turned out stronger than expected with a 0.5% gain versus the projected 0.3% uptick. Leading indicators is due today and a fall from 105.5% to 104.4% is expected.

Commodity Currencies (AUD, NZD, CAD)


The Kiwi was the leader of the gang as it got a healthy boost from a 3.2% gain in ANZ commodity prices and another increase from the GDT auction. Dairy prices are up 0.6%, slower than the earlier gain but still enough to bring prices up by their third month in a row. The RBA kept rates on hold as expected and brushed off the Q1 slowdown. Australian GDP and US crude oil inventories data are due next.

By Kate Curtis from Trader’s Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 08, 2017)

USD

The dollar regained some ground when the text of Comey's opening statement was released on the Senate website. It hinted that the former FBI head won't be divulging evidence of wrongdoing on Trump's part when it comes to sharing intelligence information on Russian officials. US consumer credit fell sharply to $8.9 billion to indicate a possible slowdown in spending for April.

EUR

The euro tanked when rumors about the ECB cutting its inflation outlook hit the newswires. This follows the downbeat flash CPI readings released late last week. German factory orders also printed a weaker than expected 2.1% slump instead of the projected 0.2% dip. No actual policy changes are expected from the ECB today but traders are likely to hunt for policy clues from Draghi's testimony and press conference.

GBP

The pound was able to recover slightly on more polls hinting that the Conservatives could maintain their lead in the elections. Halifax HPI also came in stronger than expected with a 0.4% gain versus the projected 0.2% drop. The UK parliamentary elections is coming up next and a majority for the Tories could restore political stability in the country.

CHF

The franc gave up some ground to most of its peers as risk appetite returned to the markets. The SNB foreign currency reserves reading dipped from 697B CHF to 694B CHF to show no evidence of intervention just yet. Swiss jobless rate is due next and no change from the 3.3% reading is eyed.

JPY

The yen was one of the weakest performers for the day as it gave up ground on risk appetite. Japan's leading indicators came in slightly better than expected at 104.5% versus the projected 104.4% reading, down from the earlier 105.5% figure. The final GDP reading is due next and a small upgrade from 0.5% to 0.6% is expected.

Commodity Currencies (AUD, NZD, CAD)

The Aussie got a strong boost from a better than expected 0.3% GDP reading versus the projected 0.2% expansion. The Loonie was also lagging behind due to a surprise fall in Canada's building permits and a buildup in US crude oil stockpiles of 3.3 million barrels. The Australian trade balance is due next and a smaller surplus of 1.91 billion AUD is expected. China is also set to print its trade balance and might report a wider surplus of 336 billion CNY.

By Kate Curtis from Trader’s Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 09, 2017)

USD

The US dollar steadied throughout the day as traders didn't see any surprises from the Comey testimony. Economic data was in line with estimates as the initial jobless claims reading came in at 245K, down from the earlier 255K figure. Only the final wholesale inventories report is due from the US today.

EUR

The euro gave up some ground as the ECB downgraded inflation forecasts as expected. However, losses were limited since Draghi gave a few upbeat remarks during the presser. He clarified that normalization has not been discussed but that they're not looking to cut anytime soon unless things get worse. French industrial production and the Italian quarterly unemployment rate are due next.

GBP

The pound was slightly weaker for the day as traders are feeling the jitters during the UK elections. Early polls are still hinting at a narrow lead for the Conservatives but that they could eventually win the majority. UK manufacturing production data is due next and a 0.8% rebound over the earlier 0.6% drop is eyed. Industrial production is slated to recover by 0.7%.

CHF

The franc had a mixed run as it acted as safe-haven against most of its rivals but caved to dollar and Kiwi strength. Data from Switzerland came in better than expected as the jobless rate improved to 3.2% while CPI ticked 0.2% higher versus the projected flat reading. There are no reports due from the Swiss economy today.

JPY

The yen gave up some ground as traders reestablished their long dollar positions on the lack of surprises during Comey's testimony. Japan's final GDP reading was downgraded from 0.5% to 0.3% instead of being upgraded to the 0.6% forecast. Tertiary industry activity data is due next and a 0.5% rebound is expected.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was able to hold on to its gains even with downbeat trade data from Australia and China. Australia's surplus narrowed from 3.17B AUD to 0.56B AUD versus the 1.91B forecast as exports slipped 8%. China's trade surplus widened from 262B CNY to 282B CNY versus the projected rise to 336B CNY. Australian home loans and Chinese inflation numbers are lined up next. Canada is also set to release its jobs report and might show a gain of 11.5K in hiring.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (June 12, 2017)

USD

The US dollar regained some ground against its peers as risk aversion kicked in after the UK elections. There were no major reports out of the US on Friday and only the Fed budget balance is due next. Dollar demand also got an extra boost after Comey's testimony did not have any damning evidence for Trump.

EUR

The euro trailed the pound in losing ground to most of its counterparts after the UK snap elections led to a hung parliament. Medium-tier data from the region also missed expectations while today only has the Italian industrial production data on tap. Analysts are expecting to see a 0.2% uptick.

GBP

The pound sold off sharply after the UK snap elections resulted to a hung parliament. Prime Minister May is now making moves to hold on to office and is also seeking a coalition with other political parties. There are no reports due from the pound today but the post-election selloff could resume or traders could price in expectations for the top-tier data due this week.

CHF

The franc took in some gains after the pound tanked during the UK elections. There were no reports out of Switzerland on Friday and none are due today so market sentiment could stay in play.

JPY

The yen also took advantage of the rally in safe-havens during the aftermath of the UK elections. Data from Japan was stronger than expected as tertiary industry activity rose by 1.2% versus the projected 0.5% uptick. Core machinery orders, PPI, and preliminary machine tool orders data are due next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls held on to their gains even though a bit of risk aversion came into play on Friday. Canada added 54.5K jobs in May versus the projected 11.5K increase. Australian banks are closed for the holiday today and there are no major reports due.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (June 13, 2017)

USD

The dollar took in some losses against its rivals as the tech sector tumble on Wall Street dragged sentiment down. There were no major reports out of the US on Monday while today has the PPI and NFIB Small Business index. Headline PPI could stay flat while core PPI could have a 0.2% uptick.

EUR

The euro managed to hold its ground as the first round of French parliamentary elections yielded a lot of support for Macron's political party. However, Italian industrial production was weaker than expected with a 0.4% drop instead of the projected 0.2% uptick. German ZEW economic sentiment index is due today and a rise from 20.6 to 21.6 is eyed.

GBP

The pound carried on with its slide from after the elections last week as there still has been no political clarity in the UK. PM May apologized to lawmakers who lost their seats in the elections and said that it is up to the party whether or not she can keep her job. UK CPI is due next and no change to the 2.7% headline figure is eyed.

CHF

The franc consolidated against most of its peers as European market sentiment was weak but there was some degree of risk aversion. There were no reports out of Switzerland yesterday and none are due today so risk flows could determine franc direction, along with pricing in of SNB expectations.

JPY

The yen was one of the big winners for the day as dollar weakness and risk-off moves favored the safe-haven currency. Data from Japan was mixed as core machinery orders slid 3.1% while PPI was close to consensus at a 2.1% increase. The BSI manufacturing index is due next.

Commodity Currencies (AUD, NZD, CAD)

The Loonie got a big boost from hawkish remarks by BOC member Wilkins who said that the central bank might need to evaluate whether all of stimulus is still needed or not. Australia's NAB business confidence index is due next and New Zealand will print its current account balance in the next Asian session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 14, 2017)

USD

The dollar was able to hold its ground as traders are pricing in a relatively upbeat FOMC statement. A rate hike of 0.25% is widely expected but the Fed might hint that they could slow down their pace of tightening later this year. Also, the focus could be on balance sheet adjustments, which would lessen the need to hike interest rates soon. US CPI and retail sales are also due.

EUR

The euro had a mixed run as returned most of its intraday gains to commodity currencies. Data from the region was downbeat, with German WPI down 0.7% instead of gaining 0.2% and the ZEW economic sentiment index dropping from 20.6 to 18.6 instead of improving to the 21.6 consensus. German final CPI and euro zone industrial production are due next.

GBP

The pound had a boost from stronger than expected UK CPI, spurring expectations of an upbeat BOE statement. Headline inflation rose from 2.7% to 2.9% while core CPI advanced from 2.4% to 2.6% instead of dipping to 2.3%. There have also been talks of a coalition formed between the Tories and DUP. Jobs data is due next and claimants could come in at 12.5K while the average earnings index could hold steady at 2.4%.

CHF

The franc was able to score some wins as risk sentiment improved in Europe. There were no reports out of the Swiss economy and none are due today so market sentiment could be the main driver of price action.

JPY

The yen gave up some ground as risk appetite improved and data from Japan turned out weaker than expected. The BSI manufacturing index fell from +1.1 to -2.9 instead of improving to the projected +1.5 figure. The revised industrial production report is due next and an upgrade from 4.0% to 4.1% is expected.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was under some selling pressure after iron ore prices tumbled again but it recovered as risk sentiment improved later in the day. The Loonie continued to advance against its peers on hawkish remarks from BOC officials and the lack of negative reports in the oil market. Chinese industrial production, retail sales, and fixed asset investment are due next. New Zealand will release its GDP in the next Asian session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 15, 2017)

USD

The US dollar took a huge hit after economic reports turned out weaker than expected. Headline retail sales fell 0.3% instead of posting the projected 0.1% uptick while the core reading also showed a 0.3% drop. Headline CPI is down 0.1% versus expectations of a 0.2% gain. The FOMC is still coming up next and additional volatility is eyed.

EUR

The euro weakened against most of its counterparts, except for the US dollar, as medium-tier data from Germany fell short of estimates. The final CPI reading was unchanged at -0.2% instead of being upgraded to the 0.5% consensus while the ZEW economic index also turned out below expectations. Employment change ticked up by a slightly better than expected 0.4% while industrial production advanced 0.5% as expected.

GBP

The pound resumed its drop to its peers on mixed jobs data. The claimant count change came in at 7.3K, lower than the projected 12.5K increase in hiring, but the previous reading was revised to show a larger 22K rise in joblessness. The average earnings index fell to 2.1% instead of landing at 2.4% while the earlier figure was downgraded to 2.4%. The BOE decision is due next and traders are keen to see whether the central bank will attempt to reassure the public or not.

CHF

The franc had a mixed run leading up to the SNB decision this week as market sentiment and currency-specific events seemed to be the bigger drivers of price action. No actual rate changes are expected but strong jawboning could mean franc weakness as traders grow wary of intervention.

JPY

The yen took back ground against the dollar even though the industrial production figure was unchanged at 4.0% instead of being upgraded to the 4.1% consensus. There are no reports due from Japan today so traders could hold out for the BOJ decision on Friday.

Commodity Currencies (AUD, NZD, CAD)

The Loonie seemed unfazed by weaker oil prices as traders continued to buy up the Canadian currency on tightening expectations. Australia reported a weaker Westpac consumer sentiment index at -1.8% versus the earlier -1.1% reading while data from China came in closely in line with estimates. Industrial production stood at 6.5% instead of dipping to 6.4% while fixed asset investment slowed from 8.9% to 8.6%. New Zealand's GDP data is due next and a 0.7% expansion is eyed.

By Kate Curtis from Trader’s Way

 

[katetrades]

Forex Major Currencies Outlook (Jun 16, 2017)

USD

The US dollar got a boost from a relatively upbeat FOMC statement even though CPI and retail sales figures fell short of estimates prior to the announcement. The Fed reiterated its plan to hike rates three times this year and Yellen even hinted that tightening could carry on until 2018. More details on their balance sheet reinvestment plans were also shared while growth and jobs forecasts were upgraded. Building permits, housing starts, and UoM consumer sentiment data are due today.

EUR

The euro gave back some of its recent gains when medium-tier reports from its top economies turned out weaker than expected. French final CPI was flat while the trade surplus narrowed to 19.6 billion EUR instead of widening to 22.4 billion EUR. Final CPI readings are due today and downgrades could mean more weakness for the shared currency.

GBP

The pound popped higher after the BOE statement surprised with a 3-5 vote to keep rates on hold. A couple of hawkish members joined Forbes in calling for tightening as rising inflationary pressures needed to be kept in check. Prior to this, UK retail sales posted a surprise 1.2% slump as consumers are having trouble keeping up with higher prices of goods. There are no major reports due from the UK economy today.

CHF

The franc was mostly weaker against its peers after the SNB decision as policymakers highlighted the need to keep the franc weak. Their statement also noted that they're willing to intervene in the market since the currency is significantly overvalued. There are no reports due from the Swiss economy today.

JPY

The yen gave up ground as traders moved their holdings back to the dollar after the FOMC decision. The BOJ statement is coming up next and jawboning from this central bank could reinforce yen weakness. Other than that, market sentiment and US bond yields could continue to influence yen price action.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi gave up some ground to its peers when the Q1 GDP missed expectations of a 0.7% growth figure and came in a 0.5%. In Australia, the employment change reading beat forecasts at 9.7K and came in at 42K while the unemployment rate improved from 5.7% to 5.5%. There are no other major reports lined up from the comdoll economies from here.

By Kate Curtis from Trader’s Way