Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (February 21, 2018)

USD

The dollar was able to score another winning day thanks to higher yields during the debt auction. A bit of risk aversion was also present as commodities and stocks closed in the red. Flash manufacturing and services PMI are due from the US today, but the attention could be on the FOMC minutes.

EUR

The euro gave up some ground to most of its peers as confidence in the region ticked down. The German ZEW economic sentiment index fell from 20.4 to 17.8 versus the estimated drop to 16.0 while the region's index dipped from 31.8 to 29.3 versus the estimated 28.4 figure. PMI readings from the manufacturing and services sectors of Germany and France are due. Small dips are eyed as well, which could bring the region's overall readings down.

GBP

The pound was able to stay mostly resilient despite resurfacing Brexit concerns. MPs have drafted a letter to PM May to set their requirements for a post-Brexit deal with the EU. UK CBI industrial order expectations fell from 14 to 10 versus the consensus at 12. UK jobs data is due today and a smaller increase in claimants is eyed. No change in the average earnings index of 2.5% is expected.

CHF

The franc gave up a bit of ground to its peers as risk-taking was present during the London session. The Swiss trade balance was also smaller than expected at a surplus of 2.09 billion CHF. There are no reports due from the Swiss economy today so sentiment could push franc pairs around.

JPY

The yen managed to trim its losses even though the dollar regained safe-haven appeal. There were no reports out of Japan yesterday while today has the flash manufacturing PMI and all industries activity index. Still, yen pairs could take their cue from dollar action, especially when the FOMC minutes are released.

Commodity Currencies (AUD, NZD, CAD)

The comdolls chalked up losses to the dollar as risk aversion was present in the markets. Canada reported weaker wholesale sales while New Zealand's GDT auction yielded a 0.5% dip in dairy prices. Meanwhile, data from Australia was mixed but saw more upside surprises. Construction work done for the previous quarter sank 19.4% versus the estimated 9.8% drop while the MI leading index fell 0.2%. On the flip side, the wage price index grew by 0.6% versus the estimated 0.5% uptick.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 23, 2018)

USD

The US dollar lost ground to its peers as risk appetite appeared to return to the markets. Bond yields ticked lower while equities and commodities chalked up gains, leaving the safe-haven currency to decline. Up ahead, FOMC members Dudley, Williams, and Mester have testimonies scheduled so their monetary policy remarks could determine where the dollar might be headed next.

EUR

Euro zone economic data turned out weaker than expected in the previous London session as the German IFO business climate index fell from 117.6 to 115.4. The ECB meeting minutes contained a few hawkish remarks but the central bank's hesitation to commit to a tightening plan has led to some euro weakness. Euro zone final CPI readings are lined up today.

GBP

The pound managed to hold its ground despite weaker than expected UK data. The Q4 GDP estimate was revised down from 0.5% to 0.4% instead of being kept unchanged as expected while the CBI realized sales index fell from 12 to 8 versus the estimated rise to 13. There are no reports due from the UK today but BOE MPC member Ramsden has a speech due.

CHF

The franc was also able to rake in some gains as it took advantage of dollar weakness to score some risk-off flows. There were no reports out of the Swiss economy yesterday and none are due today so market sentiment could remain the biggest driver.

JPY

The yen was a big winner as dollar weakness led risk averse traders to the lower-yielding yen.There were no major reports out of Japan then while the national core CPI was released earlier today. A stronger than expected 0.9% gain was reported versus the 0.8% consensus.

Commodity Currencies (AUD, NZD, CAD)

The Loonie suffered a sharp drop upon seeing Canada's retail sales report, as the headline figure fell 0.8% in December while the core reading showed a 1.8% slump. New Zealand, on the other hand, posted stronger than expected quarterly spending data. Headline retail sales rose 1.7% while the core reading had a 1.8% gain. Canada's CPI readings are due next and more disappointments could spur another leg lower for the Loonie.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 26, 2018)

USD

The dollar managed to stay supported throughout the previous week as Fed tightening expectations strengthened while risk aversion lingered in the markets. There were no reports out of the US economy on Friday but Fed officials had a few more positive remarks on the US economy. There are no major reports due today, with only FOMC member Quarles' testimony due.

EUR

The euro returned some of its recent gains before the week came to a close as final CPI readings were unchanged at 1.3% for the headline figure and 1.0% for the core version. There are no reports due from the euro zone today but ECB head Draghi has a speech scheduled and any jawboning remarks could lead to more euro weakness.

GBP

The pound managed to hold its ground, except against the Loonie, even though there were no major UK reports out on Friday. MPC member Ramsden had a speech in which he talked about the economy's productivity growth challenge. Only the High Street lending report is due from the UK today and this might not lead to huge pound moves.

CHF

The franc had a mixed run as it reacted mostly to currency-specific factors. There were no reports out of the Swiss economy then and none are due today, so market sentiment could push franc pairs around.

JPY

The yen gapped down over the weekend as market watchers are bracing for BOJ head Kuroda's testimony. There are no other major reports due from Japan, leaving yen pairs to react to overall sentiment as well.

Commodity Currencies (AUD, NZD, CAD)

The Loonie had a strong run thanks to stronger than expected Canadian CPI. The headline figure turned out better than expected at 0.7% versus the 0.4% estimate, reviving talks of a BOC hike. Other underlying inflation measures also reflected a stronger pace of increase in price levels also. New Zealand's trade balance is due in the next Asian session.


By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 27, 2018)

USD

The US dollar was in a weak spot as equities started the week on a positive note and traders seem wary of a cautious tone from new Fed Chair Powell's testimony. US new home sales also came in weaker than expected with a surprise fall. CB consumer confidence and US durable goods orders data are also due today.

EUR

The euro managed to score some gains when ECB head Draghi offered a few more optimistic remarks on the economy. He acknowledged that euro zone growth has been robust and that the labor market could see more improvements. However, he also warned that financial market volatility and currency movements warrant close monitoring. Flash CPI readings from Germany and Spain are due today and gains are eyed.

GBP

The pound was able to catch a bid as leaders continued to talk about a potential trade agreement with the EU even after Brexit. UK Labour leader Corbyn said that the government wants to negotiate a new customs union that could preserve a tariff-free arrangement. There are no reports due from the UK today so the focus could stay on Brexit headlines.

CHF

The franc gave up a bit of ground as risk appetite was in play. There were no reports out of the Swiss economy then and none are due today, which suggests that the franc could take its cue from sentiment or euro movements.

JPY

The yen gapped down over the weekend as market watchers are bracing for BOJ head Kuroda's testimony. There are no other major reports due from Japan, leaving yen pairs to react to overall sentiment as well.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the weaker performers as falling crude oil and NAFTA jitters weighed on the currency. Word is that Mexico's President Nieto called off a visit to the US after a phone call in which Trump refused to announce that Mexico won't have to foot the bill for the border wall. New Zealand reported a trade deficit of 566 million NZD after the earlier 596 million NZD surplus, but this was still better compared to the estimated 2.71B NZD deficit.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Feb 28, 2018)

USD

Economic data from the US was mostly weaker than expected yesterday as durable goods orders data and the goods trade balance fell short of estimates. However, the dollar got a boost when new Fed Chairperson Powell gave his testimony and added a few more hawkish remarks that supported tightening expectations. Powell mentioned that he doesn't want to prejudge potential rate changes but listed more factors that tilt the risks to the upside. The preliminary GDP is up for release and analysts are expecting a downgrade from 2.6% to 2.5%.

EUR

The pound took some hits even though there were no major reports out of the UK. Moody's Brexit Monitor shared a gloomy outlook for the UK, citing “Consumer indicators are below five-year averages and household consumption growth has slowed since the Brexit referendum in June 2016. Lacklustre retail sales fell further below their five-year trend in January." There are no major reports due from the UK today.

GBP

The pound took some hits even though there were no major reports out of the UK. Moody's Brexit Monitor shared a gloomy outlook for the UK, citing “Consumer indicators are below five-year averages and household consumption growth has slowed since the Brexit referendum in June 2016. Lacklustre retail sales fell further below their five-year trend in January." There are no major reports due from the UK today.

CHF

The franc raked in more gains as risk aversion returned to the markets on stronger tightening prospects. There were no reports out of the Swiss economy then while today has the KOF economic barometer due. A dip from 102.9 to 102.6 is eyed. The UBS consumption indicator is also up for release.

JPY

The yen also chalked up some gains as global tightening prospects heated up on hawkish ECB and Fed remarks. However, data from Japan came in weaker than expected earlier today, with the preliminary industrial production and retail sales both falling short. There are no other reports due from Japan, which suggests that sentiment could take over yen price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were the weakest in the bunch as risk appetite returned to the financial markets. Apart from global tightening expectations, weaker PMI readings from China also dampened demand for commodity currencies. The official manufacturing PMI fell from 51.3 to 50.3 versus 51.2 while the non-manufacturing PMI slid from 55.3 to 54.4. EIA crude oil inventories data is due today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 1, 2018)

USD

The US dollar was able to take advantage of risk-off flows despite weaker than expected US data. Chicago PMI and pending home sales both disappointed while the preliminary GDP was downgraded from 2.6% to 2.5% in Q4 2017 as expected. US core PCE price index is due today and a 0.3% uptick is eyed, slightly stronger than the earlier 0.2% increase. Personal spending and income numbers are also lined up, along with the ISM manufacturing PMI, which is expected to dip from 59.1 to 58.7.

EUR

The euro was in a weak spot as resurfacing Brexit concerns also weighed on the shared currency. Flash CPI estimates came in line with expectations of 1.2% for the headline figure and 1.0% for the core figure. Final manufacturing PMI readings from the top euro zone economies are due today.

GBP

The pound was one of the biggest losers for the day when the EU released its draft withdrawal agreement that specified a common regulatory area with Northern Ireland. This is a key point of contention for several UK officials, which suggests that tensions could flare again. There were no major reports from the UK then, which explains the extra focus on Brexit-related updates. UK manufacturing PMI is due today and a dip from 55.3 to 55.1 is expected.

CHF

The franc was also able to take advantage of risk-off flows in recent sessions, especially since other European currencies were on weak footing. Swiss data was also mostly stronger than expected, with the KOF economic barometer up from an upgraded 107.6 reading to 108.0. However, the Credit Suisse economic expectations index fell from 34.5 to 25.8. Swiss GDP, retail sales, and the UBS consumption indicator are due today.

JPY

The yen was the biggest winner for the day as it also managed to outpace the safe-haven dollar. Japanese data actually came in below expectations in yesterday's Asian session but today's set was in the green. Capital spending is up 4.3% versus 3.1% for the latest quarter, also a notch higher than the earlier 4.2% gain. Consumer confidence index and the bond auction are scheduled next.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground across the board as traders dumped higher-yielding currencies. The Aussie was actually in a good spot earlier on but soon gave up ground on risk aversion. The Loonie was also hit by weaker oil prices after the EIA reported a larger than expected build in stockpiles. Australia's private capital expenditure disappointed with a 0.2% drop versus the estimated 1.0% gain.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 2, 2018)

USD

The US dollar took hits against most of its counterparts when Trump announced his plans to impose higher tariffs on steel and aluminium as this sparked trade war fears. Data from the US was mostly better than expected, though, with the ISM manufacturing PMI up from 59.1 to 60.8 versus the 58.7 forecast so the dollar still managed to hold its ground against commodity currencies. Only revised UoM consumer sentiment data is lined up today.

EUR

The euro had a mixed round as it gave up ground to the lower-yielders but advanced against commodity currencies and the pound. Data came in mixed, with Italian manufacturing PMI and monthly unemployment rate coming in weaker than expected. German retail sales, import prices, and Spanish unemployment change data are due next.

GBP

The pound carried on with its slide as more traders tuned in to the EU draft agreement headlines and are waiting to hear what PM May has to say about it. UK manufacturing PMI fell from 55.3 to 55.2 but was better than the projected fall to 55.1. Construction PMI is due next but May's speech would likely take the spotlight.

CHF

The franc took advantage of risk-off flows and weakness in its European rivals. Swiss manufacturing PMI also beat expectations by rising from 65.3 to 65.5 versus the estimate at 64.1. There are no reports due from the Swiss economy today so sentiment could be the major driver.

JPY

The yen regained ground to the dollar as fears of a US trade war returned and risk aversion was in full swing. Data from Japan was actually weaker than expected as the consumer confidence index fell from 44.7 to 44.3 versus the estimated improvement to 44.9. Earlier today, it was reported that the jobless rate improved from 2.8% to 2.4%.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were hardest hit by trade war fears on Trump's announcement, particularly the Loonie which is still reeling from NAFTA talks. Canada's current account balance beat expectations but its Markit PMI was a miss. The monthly GDP reading is due next and a meager 0.1% growth figure is eyed.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 5, 2018)

USD

The US dollar gave up some ground to its peers on Friday as trade war fears escalated, but it managed to hold on to its gains versus the commodity currencies. The UoM consumer sentiment index was downgraded from 99.9 to 99.7 but still slightly better than the 99.4 consensus. The ISM non-manufacturing PMI is due today and a fall from 59.9 to 58.9 is eyed, with traders likely to pay closer attention to the jobs component.

EUR

The euro struggled to hold its ground versus the yen but managed to advance against the dollar and commodity currencies. Data was mixed, with German retail sales down 0.7% versus the estimated 0.8% uptick and import prices beating expectations with a 0.5% gain. Final services PMI readings from its top economies, along with the region's retail sales figure, are lined up today.

GBP

The pound was the weakest of the bunch as resurfacing Brexit concerns weighed on business sentiment and the currency. This has been the case since the EU draft agreement was released, and PM May's speech hinted of more roadblocks ahead. The construction PMI beat expectations and the services sector will release their PMI today. Analysts expect a gain from 53.0 to 53.3.

CHF

The franc took advantage of risk-off flows as it rallied across the board. There were no reports out of the Swiss economy then and none are due today, so market sentiment could push franc pairs around.

JPY

The yen was also a big winner in recent trading sessions, owing to risk aversion and dollar weakness. There were no reports from Japan then and none are due today, which suggests that global bond yields and dollar demand could be a factor in yen price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were mostly weaker as risk aversion on trade war jitters took hold. Recall that Trump plans to impose higher tariffs on steel and aluminum imports to the US to protect producers, thereby limiting demand for these raw materials. Canada's GDP came in line with estimates of a meager 0.1% uptick. Australia's building approvals and company operating profits beat expectations.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 6, 2018)

USD

The US dollar regained some ground to its peers but caved to the Aussie and Kiwi when risk appetite returned in the US session. Economic data was better than expected as the ISM non-manufacturing PMI fell from 59.9 to 59.5 versus the estimated tumble to 58.9. However, it's worth noting that the prices and employment components posted steep declines. Only factory orders and the IBD/TIPP economic optimism index are due today.

EUR

The euro had a mixed run as medium-tier data barely provided support. Final services PMI readings from the region's top economies came in mostly weaker than expected. Only the retail PMI is due today but traders may be positioning ahead of the ECB statement.

GBP

The pound staged quite a rebound from the previous selloff as PM May's speech provided some assurance and UK services PMI beat expectations. The reading rose from 53.0 to 54.5 versus the consensus at 53.3. There are no major reports due from the UK today so the focus could return to Brexit.

CHF

The franc returned some of its safe-haven winnings as risk appetite improved towards the end of the day. There were no reports out of Switzerland then while today has the CPI due. A rebound of 0.3% from the earlier 0.1% dip is eyed.

JPY

The yen caved to dollar strength and returned some of its winnings to the Aussie and Kiwi when risk appetite peeked back. There have been no major reports out of Japan so far and none are due today, so market sentiment could be the main driver.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was still in a weak spot despite the pickup in crude oil and sentiment. NAFTA concerns and remaining fears of a trade war still weighed on the Canadian currency as it stands to be the worst-hit if Trump pushes through with his tariff plans. Economic data from Australia has been weaker than expected today, with the current account deficit widening from 11 billion AUD to 14 billion versus the estimated 12.3 billion AUD shortfall. Retail sales also disappointed with a 0.1% uptick versus the estimated 0.4% gain. The RBA decision is due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 7, 2018)

USD

The US dollar had relatively quiet time for the most part of the US session as officials sought to calm fears of a trade war. However, the selling resumed when economic adviser Gary Cohn announced his resignation, which would likely leave stronger protectionist sentiment in the White House, which would prove bearish for the dollar. Medium-tier data from the US has also been downbeat. Only the US Beige Book is due today.

EUR

The euro continued to advance against most of its counterparts as commodity currencies were on shaky footing and another dollar selloff ensued. The region's retail PMI improved from 50.8 to 52.3 to reflect stronger expansion. French trade balance and the region's revised GDP are due today.

GBP

The pound also managed to recoup some of its earlier losses and was able to rake in more gains to commodity currencies. There were no major reports out of the UK yesterday and PM May's recent speech on Brexit has been somewhat reassuring, allowing sterling to regain some ground.

CHF

The franc was off to a weak start as risk appetite returned in the earlier sessions before the rallies resumed later on. Dollar weakness and risk aversion returned to the markets on Cohn's resignation, reviving gains for the lower-yielding currency. Swiss CPI was stronger than expected with a 0.4% gain versus the estimated 0.3% uptick and the earlier 0.1% dip. SNB foreign currency reserves data is due next.

JPY

The yen was returning some of its recent wins as risk appetite appeared to be improving, but it soon resumed the climb when the dollar lost ground on Cohn's announcement. Only the leading indicators report is due today, so the yen could continue to take cues from sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a bit of reprieve from their declines in the earlier sessions but the slump resumed as trade war fears escalated on Cohn's resignation. Australia's current account balance and retail sales fell short of estimates but the RBA kept rates on hold at 1.50% as expected. The Loonie took another huge hit on NAFTA concerns. New Zealand reported another fall in dairy prices during the GDT auction while Australia printed a weaker 0.4% GDP reading versus the 0.5% consensus. The BOC statement is coming up next, just after the release of Canada's trade balance and labor productivity report.

By Kate Curtis from Trader's Way