Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (February 25, 2013)

USD: Neutral

There are a few major U.S. economic releases due this week, such as the CB consumer confidence data and the ISM manufacturing PMI, and these could either confirm or reverse the pro-dollar bias that the FOMC meeting minutes resulted in last week. Recall that the monetary policy committee members suggested overlooking the previously set inflation and unemployment targets and considered a gradual withdrawal or tapering off of their asset purchase program. Federal Reserve Governor Ben Bernanke is also set to give a speech towards the middle of the week and, since this is a semi-annual testimony, it could have a huge impact on price action. Indications that the Fed will soon start to reduce their asset purchases could continue to fuel the dollar rally while retractions or opposite signals from economic data could force the Greenback to return its recent gains.

EUR: Bearish

Italian elections are still going on in the euro zone and it seems that the odds are tilted towards a less favorable outlook. If early polls show increased chances of a political stalemate, the resulting uncertainty and unstable leadership could keep weighing on the euro. Additionally, ECB Governor Draghi has a speech later this week and he could comment on the recent weaknesses in the euro zone. The other week, the region printed weaker than expected GDP then suffered a bout of poor PMI figures last week. The European Commission also remarked on the possibility of worse than expected economic performance in the region for the entire year. EU officials believe that the economy will shrink by 0.3% in 2013 and that unemployment will keep going up.

GBP: Bearish

The U.K. just received a debt rating downgrade from credit rating agency Moody’s on Friday. As a result GBP/USD gapped down over the weekend as Asian session and London session traders will start to incorporate their reactions today. According to the statement from Moody’s, the U.K. is likely to face weaker growth in the near term and that the BOE might need to expand their asset purchases just to keep the economy afloat. BOE Governor King already expressed the central bank’s willingness to do so, which has already been weighing on the pound for the past trading weeks.

JPY: Bearish

Yen pairs have been moving more cautiously these days as traders await Prime Minister Abe’s appointment of the next central bank head. If he appoints one that favors a weak currency in the country’s battle against deflation, the yen could resume its selloff against its counterparts. Among the three candidates touted to take the BOJ helm is Muto, who is expected to be the most bearish for the yen.

CHF: Neutral

There are several medium-tier data due from Switzerland this week. With the euro and the pound suffering sharp selloffs as their central banks favor loose monetary policy, the franc has been emerging as the safer currency in Europe. However, SNB head Jordan already talked about keeping the franc down, which explains why traders are still hesitant to park their money in the Swissy.

Commodity Currencies (AUD, CAD, NZD): Neutral

There are no major economic reports due from Australia, Canada, or New Zealand this week, which suggests that these currencies could trade sideways against the dollar, unless there are market-moving data from the U.S.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (February 26, 2013)

USD: Bullish

Federal Reserve Chairman Ben Bernanke will deliver his semi-annual testimony in Congress during today’s US session and possibly talk about the previously released FOMC meeting minutes, wherein the policymakers showed an inclination for an early tapering off of asset purchases. At that time, they considered overlooking inflation and unemployment rate targets, but Bernanke could have more to say on the issue. If he confirms the Fed’s change in monetary policy bias, the dollar could be in for further gains. But if he decides to manage market expectations and downplay the potential withdrawal of asset purchases, the dollar could retreat against its counterparts and resume trading mostly on economic data. The CB consumer confidence and new home sales data are due today and both are expecting improvements.

JPY: Neutral

Yen traders are still waiting for Japanese Prime Minister Abe’s appointment of the next central bank head. It looks like Kuroda is being touted most likely to get the position and his aggressive ideas for combatting deflation could be very negative for the Japanese yen. Japanese retail sales are due at the end of the New York session and a huge decline is expected, which might trigger a quick yen selloff. The pair tumbled sharply yesterday after gapping over the weekend as a number of large hedge funds decided to liquidate their positions prior to the actual BOJ head appointment.

EUR: Bearish

Early exit polls in the Italian elections aren’t looking too good as some are showing mixed winners for the Lower House and Senate. Other polls are hinting at the possibility of Berlusconi grabbing majority of the seats in parliament, which will be definitely negative for the euro. After all, Berlusconi is known for his political and sex scandals, which ushered in government instability for Italy. In addition, if different parties win majority of the seats, it could result force the lawmakers to make a political coalition, which would also be messy in terms of policy and political direction.

GBP: Bearish

Bank of England Governor King is giving a speech today. He just voted in favor of further easing, according to the minutes of the latest monetary policy meeting. The last few times that happened in the past five years, the central bank actually implemented further asset purchases in their next interest rate decision or within the next three months. Also, the impact of Moody’s credit rating downgrade is still weighing on the pair as it led market participants to worry about rising debt costs in a country that’s already dealing with a problematic budget.

CHF: Bullish

With all that’s going on in the euro zone and the UK, the Swiss franc seems to be the safer European currency to buy. However, the SNB’s stance of keeping the franc down and defending their peg with utmost determination is keeping traders from buying the Swissy. The employment report for Q4 2012 is due today and is expected to show a decrease from 4.12 million to 4.11 million in the number of employed people.

Commodity Currencies (AUD, NZD, CAD): Bearish

Sentiment for the commodity currencies is still bearish, although AUD/USD, USD/CAD, and NZD/USD all seem to be approaching significant inflection points. AUD/USD looks ready to move towards 1.0200 support while NZD/USD is inching close to .8300. USD/CAD seems to be stalling close to 1.0300, which could cap off the pair’s recent rallies. Chinese HSBC PMI came in below consensus yesterday, although it did point at an expansion. No major releases are due from Australia, Canada, and New Zealand today so the downbeat monetary policy expectations from their respective central banks could keep rallies at bay.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (February 27, 2013)

USD: Bearish

Based on the tone of Ben Bernanke’s semi-annual testimony in front of the U.S. Congress yesterday, the Federal Reserve is in no rush to withdraw stimulus. He mentioned that they’d like to see some improvements in economic data, particularly in the employment sector, before considering reducing their asset purchases. According to him, the benefits of monetary policy stimulus outweigh the risks for now, which suggests that the expected tapering off of bond purchases won’t take place anytime this year. This statement had a muted effect on most dollar pairs but it was enough to keep further rallies at bay, hinting that traders could be changing their minds about buying up the dollar. Bernanke has another speech during today’s New York session, along with the release of U.S. durable goods orders data and pending home sales figures.

JPY: Neutral

For now, yen pairs are still on neutral ground as traders await Abe’s nomination of the next central bank head. USD/JPY has been moving sideways around the 91.50 region and consolidating even more tightly. If Abe decides to nominate Kuroda, who is a known yen bear, we could see USD/JPY break to the upside. Otherwise, the yen could resume its rally and break below 91.00. Japan is set to release manufacturing production and industrial production during the latter half of the U.S. session.

EUR: Bearish

There is still no clear indication of who the Italian election winners are but it seems that markets are pricing in the idea of a Berlusconi-Bersani coalition. This could be bearish for the euro in the longer run as political stalemates like these tend to lead to tension and uncertainty, making it more difficult to implement fiscal reforms. As a result, European stocks sold off reflecting investors’ uneasiness about the potential outcome of the Italian elections. Only medium-tier reports are due from the euro zone today, including the German GfK consumer confidence figure, which aren’t expected to have a huge impact on euro pairs’ movement. Keep an eye out for any updates on the Italian elections to figure out whether EUR/USD could break below 1.3050 or bounce back up to 1.3300.

GBP: Bearish

There is a long-term bearish sentiment for the pound as the BOE has already expressed its willingness to implement further quantitative easing. However, it seems that traders have already closed off some of their positions and booked profits around the 1.5100 mark. The second estimate for the UK Q4 2012 GDP is set for release today and, although most analysts aren’t expecting any revisions from the 0.3% contraction reported, a downside surprise could put pound pairs back on their downtrend. Business investment data and a speech from monetary policy committee member Bean are also on tap for today.

CHF: Neutral

Switzerland’s employment level managed to hold steady at 4.12 million for Q4 2012, higher than the estimated dip to 4.11 million. This caused a slight rally for their yesterday but it appears traders are still cautious about buying up the franc. The UBS consumption indicator and KOF economic barometer are due today and strong figures could usher in further demand for the franc.

Commodity Currencies (AUD, CAD, NZD): Bullish

AUD/USD, USD/CAD, and NZD/USD are trading right on significant inflection points and are showing signs of a potential reversal since the selloff among commodity currencies might be already overdone. AUD/USD is finding support at the 1.0200 major psychological level with a bullish divergence and oversold stochastic on the daily time frame while USD/CAD formed a doji also on the daily time frame. NZD/USD, on the other hand, has already broken below the 0.8300 handle but appears prime for a retracement.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (February 28, 2013)

USD: Bullish

The U.S. dollar may have lost some ground against most of its major counterparts during yesterday’s trading but this was mostly a result of a rebound in risk and profit-taking at key levels. U.S. data came in mixed with durable goods orders showing a 5.2% decline, worse than the estimated 4.8% drop, while the previous month’s figure was revised down from 4.6% to 4.3%. Core durable goods, on the other hand, chalked up a 1.9% increase. This was much better than the estimated 0.3% uptick and the previous month’s 1.0% growth. Pending home sales also came in stronger than consensus as the report printed a 4.5% jump, outpacing the predicted 1.7% increase. For today, economic data could drive dollar pairs as the U.S. has the preliminary GDP reading and weekly jobless claims on tap. The U.S. economy is expecting to see an upward revision from -0.1% to 0.5% in its Q4 2012 GDP reading and, if that happens, demand for the U.S. dollar could rise as this could bring the Fed closer to tapering off its asset purchases.

EUR: Bearish

The Italian bond auction surprisingly turned out better than many expected, although most market participants were actually expecting the worst. Yields didn’t spike as sharply as the 10-year Italian bond yield landed at 4.83% from 4.10%, still below the 5.00% threshold. However, political uncertainty still lingers in Italy as Bersani refuses to form a coalition with Grillio or Berlusconi, upping the odds for another election in the country. Another factor that could weigh on the euro is ECB head Draghi’s comments on the central bank being far from thinking about a withdrawal of monetary policy stimulus.

GBP: Bearish

The pound managed to escape a strong selloff during yesterday’s trading as their GDP figure didn’t undergo any negative revisions from the initially estimated 0.3% contraction. However, the quarterly business investment report revealed that investors aren’t looking to park their money in the U.K. as the figure came in at 1.2%. This was way worse than the estimated 2.2% uptick for the period and the previous quarter’s 0.5% uptick. There are no major reports due from the U.K. today as pound pairs could trade sideways, awaiting further catalysts. Sentiment for this currency remains bearish though as the BOE has committed to loose monetary policy.

JPY: Neutral

Yen traders continue to sit tight awaiting the nomination of the next BOJ head, but it seems that Japanese economic data has been leading to a few moves here and there. The Japanese manufacturing PMI posted a slight improvement from 47.7 to 48.5, still in the contractionary zone. Preliminary industrial production came in weak at 1.0%, lower than the consensus at 1.6% and the previous 2.5% increase. Earlier today, Japan reported a 5.0% annual increase in housing starts, lower than the estimated 8.9% growth and the previous 10.0% reading. However, Japanese officials claim that the economy is bottoming out but that it will be a long road to recovery. Japanese inflation reports are on tap for later today and weaker than expected figures could be bearish for the yen as it would imply the BOJ has to step up its game when it comes to warding off deflation.

CHF: Neutral

There haven’t been any major reports from Switzerland lately, leaving most franc pairs moving sideways. Although the franc emerged as the safer European currency compared to the euro and pound, the SNB’s commitment to keeping the franc’s value down is preventing traders from buying up this currency.

Commodity Currencies (AUD, CAD, NZD): Bearish

Commodity currencies have broken through key inflection points but seem to show signs of retracing at the moment. AUD/USD dipped below the 1.0200 major psychological support and may be on its way to the 1.0150 mark as Australia printed weaker than expected private capital expenditure and private sector credit data earlier today. Meanwhile, the New Zealand dollar was able to benefit from an improvement in ANZ business confidence data, as the reading climbed from 22.7 to 39.4. As for the Canadian dollar, the selloff seems overdone as USD/CAD has retreated from its recent highs, but Canadian current account data could push it back up.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 4, 2013)

USD: Bullish

Although the sequestration in the U.S. which started last week will likely have long-term negative effects on the economy, this event rendered price action dependent on risk sentiment once again. This means that the U.S. dollar could still be able to outpace most major currency counterparts because of its low yield and safe-haven status. Ben Bernanke already mentioned that the Fed will carry on with its asset purchase program, which means that the central bank shares a dovish stance just like everyone else. However, central bank decisions from other major economies this week could reveal which ones are much more dovish and the U.S. dollar still stands to benefit if further easing efforts are implemented elsewhere.

EUR: Bearish

Sentiment for the euro remains bearish this week as the ECB will make its monetary policy statement later on. There are no interest rate changes expected as there seems to be very little room for further cuts, but the central bank could decide to offer more LTROs for banks who are struggling with lending and liquidity. In last week’s speech, ECB head Mario Draghi expressed his openness for further easing as part of the central bank’s commitment to shift euro zone’s focus away from financial problems and back to economic growth. So far, there has been no clear resolution in Italy’s politics but Bersani did shun the possibility of forming a coalition government.

GBP: Bearish

The Bank of England is set to make its monetary policy decision also within the week and traders are starting to price in further asset purchases from the central bank. Minutes of the previous monetary policy decision showed that BOE head Mervyn King moved over to the bears’ side, which suggests that looser monetary policy is in the cards possibly within the next three months. No monetary policy changes from the British central bank this week would increase the odds of further easing in their next statement so the overall bias for pound pairs is still bearish.

JPY: Neutral

Kuroda has already been appointed by Prime Minister Abe as the next Bank of Japan Governor but incumbent leader Shirakawa will still head the BOJ rate decision for this week. No major changes are expected, as Shirakawa would probably make the transition as smooth as possible. Besides, Japan’s CPI figures came in line with expectations so far, although they still reflected the prevailing effects of deflation on the economy.

CHF: Neutral

Only the foreign currency reserves and a speech by Swiss National Bank head Thomas Jordan is scheduled for this week, and these aren’t due until the latter half. For now, the Swiss franc might stay at its current levels against the euro and the dollar, awaiting market catalysts. EUR/CHF and USD/CHF could react more to euro zone and U.S. data in the meantime.

Commodity Currencies (AUD, CAD, and NZD): Bearish

AUD/USD just broke below the key support zone at 1.0150-1.0200 as traders are anticipating a 0.25-0.50% rate cut from the RBA tomorrow. However, RBA Governor Glenn Stevens dismissed this possibility in an earlier speech as he talked about how the previous easing efforts are starting to kick in and that the current level of stimulus is appropriate for now. No rate cut could trigger a bounce back above 1.0200 for AUD/USD while an actual rate cut could push it closer to parity. The BOC is also scheduled to make its monetary policy statement this week and, even though no policy changes are expected, outgoing BOC Governor Carney could be less hawkish and not discuss rate hikes this time around. No reports are due from New Zealand, which means that the Kiwi could follow the Aussie’s behavior for the most part.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 5, 2013)

USD: Bullish

The U.S. dollar is currently benefiting from risk flows as most central banks are about to take a dovish monetary policy stance. At the end of the day, the U.S. dollar is still king due to its lower yield and safe-haven status, even though the Fed's Bernanke previously stressed that there was no need to withdraw asset purchases yet. So far this week, there were no major economic events from the U.S., except for some speeches from FOMC members who mentioned the challenges to the Fed’s monetary policy. Today, the U.S. will print its non-manufacturing PMI figure for February and possibly report a dip from 55.2 to 55.0. A stronger than expected figure could boost the U.S. dollar during the New York session.

JPY: Neutral

Yen pairs are trading cautiously of late, waiting for further clues on monetary policy and the exchange rate mechanism. Newly appointed BOJ head Haruhiko Kuroda hasn’t mentioned anything regarding these issues yet, and isn’t likely to do so during the BOJ monetary policy decision this week. Note that this is Shirakawa’s last monetary policy statement as BOJ head; he isn’t likely to make any drastic announcements before passing the baton to Kuroda. For now, the Japanese yen might act as a lower-yielding counterpart, which could rally if risk aversion sets in.

EUR: Neutral

The EUR/USD staged a meager recovery on Monday’s trading as it found support around the 1.3000 handle. Spanish employment figures came in stronger than expected. The unemployment change figure showed a 59.4K decrease in jobs instead of the 77.5K consensus, and lower than the previous figure of a 132.1K drop in hiring. Still, this indicates another month in job losses which doesn’t bode well for one of euro zone’s largest economies. Spanish and Italian services PMI are on tap for today, and both reports are expected to sink down from their previous readings. Eurozone retail sales are due later as well, but these reports aren’t likely to cause huge moves in euro pairs as traders are sitting on their hands prior to the ECB statement later this week.

GBP: Bearish

U.K. construction PMI fell below expectations for February, as the figure dipped from 48.7 to 46.8 – its lowest level since October 2009. Analysts were expecting a slight rebound to 49.2. This led to a test of the crucial 1.5000 level for GBP/USD but the pair seems to have bounced back up to the 1.5100 area again. The U.K. will today print its services PMI figure for February, and possibly show a drop from 51.5 to 51.1 for the month. A weaker than expected figure, especially one that is below the 50.0 mark, could push the GBP/USD to break below the 1.5000 major psychological level.

CHF: Bearish

The USD/CHF pair has been on a tear lately as the pair rallied to the .9400 major psychological resistance, which seems to be holding for now. Scrolling back further, or looking at a longer-term time frame would reveal that a double bottom pattern has formed, indicating further rallies. There are no major reports from Switzerland lately and none are due today.

Commodity Currencies (AUD, CAD, NZD): Bullish

As expected, the Reserve Bank of Australia kept rates on hold at 3.00% instead of cutting by 0.25-0.50% basis points. In his latest speech, RBA Governor Stevens did mention that the recent easing efforts of the central bank are just starting to take effect in the economy, which is a hint that no further stimulus is needed for now. Reversal signals have formed right on the 1.0150 support level on the AUD/USD, signaling that the pair’s selloff could be over. Retail sales also came in higher than consensus at 0.9% earlier today while the current account posted a smaller than expected deficit. There are no major reports due from New Zealand for this week, as the Kiwi could take its cue from the Aussie, which is enjoying a rally from the RBA’s decision to keep interest rates unchanged at 3.00%. As for the Canadian dollar, USD/CAD seems to have found a top around the 1.0300 handle, but is continuing to trade according to U.S. reports.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 7, 2013)

USD: Bullish

It seems that a midweek reversal is gaining traction as the U.S. dollar gained against most of its higher-yielding counterparts during yesterday’s trading. Weak data from most major economies, such as Canada and the euro zone, dampened demand for riskier currencies. At the same time, strong U.S. data in the form of the ADP non-farm employment change report and factory orders figures boosted demand for the U.S. dollar. Only the trade balance and initial jobless claims reports are due from the U.S. today and these aren’t likely to alter risk sentiment as traders would focus on the central bank decisions on tap.

EUR: Bearish

The political stalemate in Italy continued to weigh on the euro for yet another trading day. Euro traders are also starting to price in downbeat expectations for today’s ECB rate decision where Draghi is slated to address the region’s economic weaknesses. Bear in mind that the euro zone just entered its third consecutive quarter in recession as the largest regions all posted a contraction for the last quarter of 2012. Although the central bank is likely to keep rates unchanged, watch out for a potential increase in LTRO loans or hints that the ECB is mulling alternative forms of easing.

GBP: Bearish

Pound pairs are consolidating for the day as traders sit tight ahead of the Bank of England rate decision. While the bank is expected to keep rates unchanged, many are pricing in an increase in asset purchases. Recall that BOE Governor King voted to increase easing during their last rate statement but the central bank was unable to do so since majority still voted to keep monetary policy unchanged. In the last six years, whenever BOE Governor King sided with the doves, additional QE is usually implemented within the next three months. However, he’s scheduled to step down from office soon and traders might pay more attention to what incoming Governor Mark Carney has planned for the BOE and the British economy.

Commodity Currencies (AUD, NZD, CAD): Neutral

AUD/USD retreated from its recent highs around 1.0300 and appears poised to test the 1.0200 support once more. Australian trade balance came in weaker than expected and this has been weighing down both the Aussie and Kiwi. As for the Canadian dollar, a downbeat BOC rate decision and a weaker than expected Ivey PMI triggered a break above 1.0300 for USD/CAD. There are no major reports due form the comdoll economies today as these currencies could trade purely on risk sentiment.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 8, 2013)

USD: Bullish

The U.S. dollar lost ground to the euro and the pound during yesterday’s trading as both European currencies staged relief rallies when their respective central banks decided to make no changes to current monetary policies. However, all that could reverse today with the U.S. non-farm payrolls report on tap. The report could print a 162,000 increase in hiring for the month of February and this should keep the unemployment rate steady at 7.9%. A stronger than expected figure could provide support for the U.S. dollar since the Fed is closely monitoring progress in the labor market in considering when to taper off their asset purchases. A weaker than expected reading, on the other hand, might result in a dollar selloff as this would suggest that the U.S. economy will have trouble staying afloat once the job cuts from the sequestration kick in.

EUR: Bullish

The ECB decided to keep interest rates unchanged and their ongoing easing programs at their current levels as Governor Mario Draghi highlighted the progress in the euro zone. He did point out some downside risks to growth, along with the political uncertainty in Italy, but mentioned that the central bank isn’t committed to rate changes at the moment. This relatively upbeat statement was enough to push EUR/USD above the 1.3000 handle and back to the 1.3100 area, which is acting as resistance for now. There are no other economic events scheduled in the euro zone today as euro pairs could continue to trade on the positive sentiment resulting from yesterday’s ECB decision.

GBP: Bearish

Many were surprised to hear that the Bank of England didn’t make any additional asset purchases during their latest interest rate decision as BOE Governor Mervyn King previously voted to implement further stimulus. The BOE’s interest rate was also kept steady at 0.5%. This was enough to push GBP/USD back above the 1.5000 major psychological level to a high of 1.5080, but the pair was unable to sustain its rally. This reveals that market participants still believe that the lack of easing this time just increases the odds of further easing next time.

Commodity Currencies (AUD, NZD, CAD): Neutral

The Australian dollar and New Zealand dollar moved sideways during yesterday’s trading sessions as there were no major reports from Australia and New Zealand. Canada printed mixed economic reports as building permits came in below expectations while their trade balance showed a smaller than expected deficit. There are no major reports due from these commodity-dependent economies today as AUD/USD, USD/CAD, and NZD/USD could take their cues from the U.S. NFP release.

JPY: Bearish

USD/JPY just made a strong break above the 94.00 handle and seems to be making a beeline for the 95.00 mark, which could act as resistance. However, the U.S. NFP is set for release today and a stronger than expected figure could push the dollar up against the yen. Improved risk sentiment, particularly for the European currencies, is also weighing on the lower-yielding Japanese yen for now.

CHF: Bullish

The Swiss foreign currency reserves report released yesterday revealed that the SNB has already spent ten times as much as it did last year on keeping their franc peg. The total amount of foreign currency reserves now amounts to nearly 75% of their GDP, prompting market participants to think that the central bank might no longer be able to afford to keep the franc’s value down later on. This triggered a franc rally as sellers closed off their short Swissy positions.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 11, 2013)

USD: Bullish

The U.S. dollar enjoyed a nice strong rally after the NFP figure came in higher than expected. The U.S. economy was able to add 236K jobs in February, higher than the estimated 162K increase. Although the previous month’s reading was revised down from 157K to 119K, the jobless rate was still able to drop from 7.9% to 7.7% in February. Since the Fed is closely monitoring improvements in the jobs market as part of their consideration in tapering off asset purchases, demand for the U.S. dollar jumped right after the upbeat figures were posted. There aren’t a lot of reports due from the U.S. at the first half of this week, which suggests potential consolidation for the next few days with a slight bullish bias towards the U.S. dollar because of its safe-haven status and relatively stronger economic standing.

EUR: Neutral

There are no major reports due from the euro zone this week as EUR/USD continues to test the 1.3000 major psychological support level. Only the German trade balance and French industrial production reports are on tap for today and these aren’t likely to trigger a strong break or bounce from the 1.0300 area. Keep an eye out for any political updates from Italy as these could result in surprise moves for the euro anytime within the week.

GBP: Bearish

The combination of weak U.K. economic outlook and strong U.S. economic data triggered a convincing break below 1.5000 for GBP/USD. The pair gapped down over the weekend and could continue to move lower for the rest of the week. However, a retest of the 1.5000 handle could be in the cards if profit-taking takes place as the U.K. isn’t set to print any major reports for today.

AUD: Bullish

Despite the Aussie selloff that took place after the U.S. NFP release, AUD/USD remains well above the 1.0200 major psychological support level. After all, Australia has also been enjoying strong economic reports recently while the RBA asserted that their recent easing efforts are appropriate and are just starting to take effect. No reports are due from Australia during the first few days of this week as AUD/USD could keep testing the 1.0200 area, but employment data due on Thursday could trigger either a bounce or a break depending on the actual results.

NZD: Bearish

NZD/USD seems to be forming a new range between the .8200 and .8300 major psychological levels as traders await the RBNZ rate decision later on this week. RBNZ head Graeme Wheeler seemed to hint at a rate cut during his one of his recent speeches, which suggests that traders could start pricing in negative expectations for the actual event as early as today.

CAD: Bullish

The Canadian dollar was the only major currency able to avoid a bloodbath from the upbeat U.S. NFP data as the Canadian economy also posted strong jobs growth during the period. Canada showed a 50.7K increase in hiring, higher than the estimated 7.8K growth and huge improvement from the previous month’s 21.9K drop in hiring. This was enough to keep their jobless rate steady at 7.0% instead of rising to 7.1%. No economic data is set for release from Canada this week but the recent labor figures could keep the Loonie afloat.

JPY: Neutral

USD/JPY broke above the 94.00 major psychological resistance and reached the 96.50 area during the NFP release on Friday yet the Japanese yen still managed to gain against its other counterparts. This suggests that traders are still risk averse, to the benefit of the lower-yielding yen. Data from Japan has been mixed so far as core machinery orders came in weak while M2 money supply beat expectations. BOJ monetary policy meeting minutes and Japan’s tertiary industry activity index are due today and these could result in clearer yen price action.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 12, 2013)

USD: Neutral

There are no major reports due from the U.S. or other major economies today so dollar pairs could simply move sideways for the rest of the day. Keep in mind though that there are ongoing tensions between North and South Korea again, which could boost risk appetite and the U.S. dollar. However, the Federal budget balance release during the U.S. session could revive concerns about sequestration, which could keep dollar rallies at bay.

EUR: Neutral

The lack of reports from the euro zone could keep EUR/USD stuck inside its range for the time being as it currently found support near 1.3000 and resistance close to 1.3100. Last week, the ECB kept rates on hold but Draghi affirmed that the euro zone would rebound later on in the year and this could keep EUR/USD above 1.3000.

GBP: Bullish

The pound has been selling off aggressively so there might be some profit-taking at the start of this week as there are no top-tier data due from the UK. The manufacturing production and trade balance, which are just medium-tier reports, could have a bit of impact on pound movement. Manufacturing production is projected to stay flat in January while the trade deficit is expected to shrink slightly from 8.9 billion GBP to 8.8 billion GBP.

JPY: Bearish

USD/JPY has been on a tear lately as the pair recently broke past the 96.50 level. This suggests that yen bears have enough firepower left to eventually push the pair even higher. Tensions in the Korean peninsula could be negative for Asian currencies as the region is being put at peril. Earlier this week, Japan’s tertiary industry activity index missed expectations and posted a 1.1% decline.

Commodity Currencies (AUD, CAD, NZD): Neutral

Commodity currencies are moving sideways for the past few days as there are no major reports so far. AUD/USD is stuck between 1.0200 and 1.0300 while NZD/USD is cruising below the .8300 mark. USD/CAD has also taken a break from its rallies and is currently moving between 1.0225 and 1.0300. The top-tier reports aren’t due until Thursday when the RBNZ will make its monetary policy statement and Australia will print its employment report but be wary of traders that are pricing in expectations as early as today.

By Kate Curtis from Trader's Way