Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Mar 8, 2018)

USD

The dollar recovered slightly from its earlier selloff when the Trump administration sounded open to exempt Canada and Mexico from higher tariffs on steel and aluminum on account of national security. Data was mostly upbeat, with the ADP non-farm employment change beating expectations for February and enjoying an upgrade for January. However, the trade balance showed a wider deficit on weaker export activity. There are no major reports due from the US today so the focus could be on tariffs and pre-NFP positioning.

EUR

The euro gave up some ground to its higher-yielding rivals when risk appetite improved. Traders also likely lightened up on their EUR holdings ahead of the ECB decision today. No actual policy changes are expected but any change in rhetoric could influence tightening expectations. Emphasis on the negative impact of euro strength on inflation could drive the shared currency down.

GBP

The pound also slid lower against its higher-yielding counterparts as Brexit jitters remained in play. There were no reports out of the UK economy but more details on the EU draft agreement didn't look positive for the UK economy. There are still no reports lined up today so the focus could stay on Brexit-related headlines.

CHF

The franc gave back most of its recent gains when risk appetite returned to the markets. SNB foreign currency reserves ticked up from 732 billion to 733 billion, hardly giving any evidence of intervention. The Swiss jobless rate is due today and a dip from 3.0% to 2.9% is eyed.

JPY

The yen also gave up some ground on risk-taking and dollar strength. Japan's leading indicators missed forecasts but today's set of medium-tier data came out mostly better than expected. There are no other reports due next so sentiment could push yen pairs around from here.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was able to recoup its earlier losses when the BOC was slightly more upbeat, with the exception of uncertainties from the Trump administration. Still, the likelihood of seeing exemptions from higher tariffs also proved positive for commodity currencies. Australia reported a higher than expected trade surplus of 1.06 billion AUD versus the 0.21 billion AUD consensus and China is set to report its own next. A deficit of 70 billion CNY is eyed, though. BOC Governor Poloz also has a speech coming up.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 9, 2018)

USD

The US dollar gained some ground to most of peers when Trump tempered his tough talk on tariffs, easing fears of a trade war. The focus shifts back to economic data today with the NFP report due. The US could report a 205K increase in hiring for February, slightly faster than the previous month's 200K gain. This might bring the jobless rate down from 4.1% to 4.0%. Analysts are also keeping close tabs on the average hourly earnings figure, which might post a 0.2% uptick.

EUR

The euro gained a lot of ground during the ECB statement as officials omitted the phrase on further easing. However, the shared currency retreated during the presser as Draghi reminded that this omission should be put in context and that no additional actions have been discussed yet. Policymakers upgraded this year's growth forecast by only 0.1% while downgrading next year's inflation estimate. Medium-tier reports like German and French industrial production are due today.

GBP

The pound also gave up ground even though there were no major reports out of the UK. Today has the manufacturing production numbers on tap and analysts are expecting to see a 0.2% uptick. Brexit jitters still seem to be in play as the EU draft agreement was released earlier in the week. Industrial production could show a 1.5% rebound from the earlier 1.3% fall.

CHF

The franc weakened to its counterparts as risk-taking and dollar strength were in play. The Swiss jobless rate improved from 3.0% to 2.9% as expected. There are no reports due from the Swiss economy today so market sentiment could push franc pairs around.

JPY

The yen also weakened on risk-taking and dollar strength, along with pricing in of expectations ahead of the BOJ decision. No actual policy changes are eyed, although traders appear hopeful for more taper clues. Apart from that, sentiment and dollar demand could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls, particularly the Loonie, were able to recover on Trump's tempered tone on tariffs. He noted that Mexico and Canada could be exempted while NAFTA negotiations are ongoing while other allies could see special treatment as well. Canada's employment change report is due today and it could show a 21.3K gain hiring after the earlier 88K decline, keeping the jobless rate steady at 5.9%. China printed stronger than expected CPI of 2.9% versus the 2.5% consensus.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 12, 2018)

USD

The US dollar initially had a strong positive reaction to upbeat NFP results, as the headline figure posted a gain of 313K versus the consensus at 205K. The earlier figure also enjoyed an upgrade from 200K to 239K while the unemployment rate was unchanged at 4.1%. Average hourly earnings also fell short with a 0.1% uptick versus the estimated 0.2% gain and the earlier 0.3% increase. US CPI, PPI, and retail sales figures are all up for release this week.

EUR

The euro resumed its slide to most of its counterparts as bulls seemed disappointed over the lack of hawkishness in the ECB presser earlier in the week. Medium-tier data from its top-economies also turned out mostly weaker than expected ,with German and French industrial production falling short of estimates. There are no major reports due from the region today.

GBP

The pound also ended the week on shaky footing as the UK manufacturing production figure missed estimates. Only a meager 0.1% uptick was reported versus expectations of a 0.2% gain or the earlier 0.3% increase while industrial production also fell short with a 1.3% gain versus the 1.5% consensus. There are no major reports due from the UK economy today.

CHF

The franc gave up some ground to its peers on Friday as risk appetite extended its stay. The Swiss jobless rate also improved from 3.0% to 2.9% as expected. There are no reports due from the Swiss economy today so market sentiment could push franc pairs around.

JPY

The yen also gave up some ground on Friday as the US dollar took most of the gains and risk appetite returned. There were no major changes to the BOJ's monetary policy bias in their latest announcement but traders are wary of further easing. Preliminary machine tool orders data is due next.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies managed to score some gains on improved risk sentiment at the end of the week. Canada reported a smaller gain of 15.4K in hiring versus the estimated 21.3K increase. Only the food price index is due from New Zealand today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 13, 2018)

USD

The US dollar shed some ground to its peers, presumably on positioning ahead of the inflation releases later this week. There were no major reports out of the US economy on Monday while today has CPI data on tap. Both the core and headline figure could post 0.2% gains.

EUR

The euro weakened to most of its peers due mostly to cautious remarks from ECB members. Coeure mentioned that inflation remains weak so the timing for a QE exit hasn't been discussed yet while Smets shared the same views. Only French private payrolls and the Italian unemployment rate are up for release today. This suggests that euro pairs could be more sensitive to data from its counterparts.

GBP

The pound was able to take advantage of dollar and yen weakness even though there were no major reports from the UK. Today has the government's annual budget release and this isn't really expected to have a huge impact on sterling movement.

CHF

The franc also gained ground to the dollar and yen, emerging as the preferred safe-haven in recent sessions. There were no reports out of the Swiss economy yesterday and none are due today, so sentiment could push franc pairs around.

JPY

The yen gained some ground on calls for Abe's resignation as a political scandal and an alleged cover-up resurfaced. This could mean an end to the easy monetary policy as part of Abenomics, which led to some bullish moves for the currency. The tertiary industry activity index, however, posted a larger than expected 0.6% fall to force the currency to retreat.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the weakest of the bunch as weaker crude oil prices were in play and the currency shrugged off NAFTA updates. Australia's NAB business confidence index declined from 11 to 9 to reflect a dip in optimism. BOC Governor Poloz has a speech coming up, just ahead of New Zealand's current account balance release.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 14, 2018)

USD

The US dollar took some hits once more as Trump decided to fire Secretary of State Tillerson and could also sack other officials that disagree with him. He also reiterated plans to impose higher tariffs on China, reviving fears of a trade war. Data has been within expectations as both headline and core CPI posted 0.2% gains. Retail sales data is due today and slightly stronger gains for both headline and core versions are eyed.

EUR

The euro had a mixed round as it reacted mostly to its counterparts on the lack of major catalysts from the region. There are still no major reports lined up today, which suggests that the shared currency could exhibit more or less the same behavior.

GBP

The pound was on stronger footing in recent sessions even though there were no major reports out of the UK economy. EU head Juncker had some warnings for the British economy for choosing to exit the union but this was greeted by cheers from MPs as confirmed the Brexit date for 2019. There are no reports due from the UK today.

CHF

The franc was also sensitive to its counterparts price action but was able to score more gains when the dollar weakened. There were no reports out of the Swiss economy then and none are due today.

JPY

The yen was one of the top performers as it took advantage of dollar weakness and drew support from stronger calls for Abe's resignation on the political scandal and alleged cover-up. Core machinery orders posted a stronger than expected 8.2% gain versus the estimated 5.3% increase while the BOJ minutes didn't contain any surprises.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was still in a weak spot, especially when BOC head Poloz sounded less inclined to dole out rate hikes in the coming months. Data from China was upbeat, with both industrial production and fixed asset investment beating estimates. New Zealand's GDP report is due next and a 0.8% expansion is eyed, stronger than the earlier 0.6% growth figure.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 15, 2018)

USD

The dollar dipped upon seeing downbeat retail sales data but soon rebounded. Headline retail sales fell 0.1% to mark consecutive monthly declines while the core reading posted a 0.2% uptick versus the estimated 0.4% gain. Headline PPI was better than expected at 0.2% while core PPI came in line with expectations. Fears of a trade war are still present and any updates on Trump's appointments could continue to keep risk-taking in check. Empire State and Philly Fed manufacturing indices are due today.

EUR

The euro was weaker across the board as ECB members reiterated their cautious stance. Draghi repeated most of its remarks during the previous week's ECB presser while Praet also mentioned that it's too early to declare victory on the inflation front, casting doubts that the central bank could tighten soon. Only final CPI readings are due today and downward revisions could reinforce the less hawkish views.

GBP

Sterling was one of the better performing currencies, likely on account of upbeat data and fading Brexit concerns. There are no reports lined up from the UK economy today, so the pound could react more to its counterparts or be sensitive to market sentiment.

CHF

The franc was able to score some gains when risk aversion returned but traders were hesitant to buy up the dollar. There were no major reports out of the Swiss economy yesterday while today has the SNB decision on tap. No policy changes are expected but any jawboning could weigh on the franc.

JPY

The yen also advanced to most of its counterparts as risk-off vibes stayed in the financial markets. There were no major reports out of the Japanese economy yesterday and none are due today, which suggests that sentiment could still be the main driving factor.

Commodity Currencies (AUD, NZD, CAD)

The Loonie shrugged off the pickup in crude oil as traders still seem to be pricing in the BOC's neutral stance. EIA crude oil inventories rose by 5 million barrels versus the estimated gain of 2.2 million barrels. New Zealand reported a lower than expected 0.6% GDP versus the estimated 0.8% expansion. There are no major reports lined up from these economies next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 16, 2018)

USD

The US dollar drew a lot of support from its peers in the New York session when medium-tier reports came in mostly stronger than expected. Initial jobless claims and the Empire State manufacturing index surpassed forecasts while the Philly Fed index missed. Industrial production, building permits and housing starts are due today.

EUR

The euro was still in a weak spot as ECB officials have been downplaying the idea of tightening as inflationary pressures have remained weak. There have been no major reports out of the euro zone yesterday while today has final CPI readings.

GBP

The pound gave up ground to the dollar and yen but managed to stay resilient against its other peers. There were no reports out of the UK yesterday while only the CB leading index is due today. Analysts expect to see a rebound from the earlier 0.2% dip.

CHF

The franc barely reacted to the SNB decision as traders shrugged off jawboning remarks from Chairperson Jordan. PPI also came in stronger than expected with a 0.3% uptick versus the estimated 0.2% gain. There are no reports due from the Swiss economy today.

JPY

The yen was the big winner in recent trading sessions as it took advantage of risk-off flows and the late news on Mueller's subpoena into Russia-related Trump documents. Japanese industrial production data was downgraded from a 6.6% decline to a 6.8% drop, though.

Commodity Currencies (AUD, NZD, CAD)

The comdolls found themselves at the losing end of the latest trading sessions as fears of a trade war lingered. The Loonie took extra hits on weak housing starts data and the downgrade in the ADP employment figure for January. Canadian foreign security purchases and manufacturing sales are due next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 19, 2018)

USD

The US dollar was on strong footing until the end of the week as data came in mostly upbeat and supportive of an interest rate hike this week. There are no major reports due from the US economy today so sentiment and expectations for the FOMC statement could push the currency around.

EUR

The euro continued to slump to the pound, yen, and dollar but was stronger versus the commodity currencies. The headline final CPI reading was downgraded from 1.2% to 1.1% instead of being unchanged as expected. Italian industrial production data is due today and a 0.5% dip is eyed. The region's trade balance is also on the docket.

GBP

The pound extended its wins, except against the yen, even though there were no major reports from the UK economy. Only the Rightmove HPI is due today so traders could keep propping the currency higher, depending on Brexit updates and overall market sentiment.

CHF

The franc had a mixed round as it mostly reacted to its counterparts. There were no reports out of the Swiss economy last Friday and today has an empty schedule as well, which suggests that the franc could keep moving to the tune of market sentiment and its rivals.

JPY

The yen was the strongest performer as it took advantage of risk-off moves and outlasted the dollar. Japan's industrial production figure was actually downgraded and the trade balance released over the weekend came in below consensus. There are no other reports due next so yen pairs could take their cues from sentiment and bond yields.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were stuck on the losing end until the end of the week as fears of more protectionism in the US could dampen demand for raw materials and commodities. Canada's reports namely foreign securities purchases and manufacturing sales missed estimates. Australia's CB leading index and New Zealand's Westpac consumer sentiment data are due in the next Asian session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 20, 2018)

USD

The US dollar had a mixed round as there were no reports out on Monday and traders are pricing in expectations for the FOMC decision later this week. A 0.25% interest rate hike is widely expected and even more hawkish hints could lift the US currency. There are no reports due from the US economy today.

EUR

The euro got a strong boost when ECB sources reported that policymakers are starting to discuss the path of interest rate hikes. They reported that officials are comfortable with the idea of mid-2019 hike expectations and that they should think about the timing of their future tightening moves from there. Data from the euro zone actually came in weaker than expected but traders shrugged this off. ZEW economic sentiment figures from Germany and the entire region are due today.

GBP

The pound staged a strong rally on rumors of a Brexit deal and made another leg higher on confirmation. The EU and UK have reached an agreement on the post-Brexit transition period but also mentioned that issues surrounding the Irish border still need to be ironed out. The focus shifts back to fundamentals with UK CPI on tap and a dip from 3.0% to 2.8% for the headline figure eyed. The core figure could fall from 2.7% to 2.5%.

CHF

The franc had a mixed run as it caved to the European currencies then chalked up smaller losses to the rest. There were no reports out of the Swiss economy then while today has the trade balance and SECO economic forecasts. Positive readings could still keep the franc supported by risk appetite might wind up dampening its gains.

JPY

The yen gave up ground as risk appetite improved for the most part of the day. Japan printed weaker than expected trade balance over the weekend and the concerns surrounding PM Abe's political scandal appear to be fading. There are no reports due from Japan today so sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The comdolls chalked up some gains, except against their European peers. New Zealand's Westpac consumer sentiment index improved from 107.4 to 111.2 while Australia reported a larger 1.0% gain in HPI for Q4. The RBA minutes revealed that the central bank is in no rush to hike. Canadian wholesale sales and the GDT auction are lined up next.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Mar 21, 2018)

USD

The US dollar is slightly higher against its counterparts as traders appear to be pricing in positive expectations for the FOMC decision. There were no reports out of the US economy yesterday. A rate hike of 0.25% is widely expected, so traders will be keeping close tabs on the updated economic forecasts and dot plot of rate change projections. It will also be Powell's first post-FOMC presser, so his views could set the tone for policy expectations in the months ahead.

EUR

The euro returned most of its recent gains to its peers as medium-tier reports turned out mostly weaker than expected. The German ZEW economic sentiment index fell from 17.8 to 5.1 while region's reading fell from 29.3 to 13.4. There are no major reports due from the euro zone today, so the shared currency could be more sensitive to its counterparts or overall sentiment.

GBP

The pound also dipped against its peers when UK inflation reports disappointed. The headline figure slipped from 3.0% to 2.7% versus the estimated fall to 2.8% while core CPI dropped from 2.7% to 2.4% versus the 2.5% consensus. Jobs data is due from the UK today and the claimant count could show a 3.1K drop in joblessness. The average earnings index could rise from 2.5% to 2.6% to signal potentially stronger inflation and consumer spending.

CHF

The franc was mostly weaker against its peers as dollar strength returned and risk appetite was present. Economic data from Switzerland was better than expected, though, as the trade balance came in at 3.14 billion CHF versus the estimated 1.87 billion CHF surplus and the earlier 2.07 billion CHF. The SNB Quarterly Bulletin is due today.

JPY

The yen also returned some of its earlier gains as risk appetite improved and the dollar extended its gains. There were no major reports out of Japan yesterday and none are due today s banks are closed for the holiday. This suggests that dollar action and overall sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie managed to take a break from its slide as oil prices picked up on geopolitical risks in Iran and Venezuela. Canadian wholesale sales also came in slightly better than expected with a 0.1% uptick. In New Zealand, the GDT auction yielded a 1.2% fall in dairy prices. The RBNZ decision is also coming up and a neutral statement is eyed.

By Kate Curtis from Trader's Way