Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (Nov 5, 2014)

USD

The US dollar returned some of its recent forex trading gains as traders booked profits ahead of the mid-term elections, which pose a risk to dollar trends. Economic data from the US was weaker than expected, with factory orders posting a 0.6% decline, worse than the estimated 0.4% drop. US ADP non-farm employment change and ISM non-manufacturing PMI figures are due today, both of which could allow the dollar to recover if the actual results come in strong.

EUR

The euro bounced back yesterday, despite weaker than expected Spanish employment figures. Joblessness rose by 79.2K in the euro zone’s third largest economy, weighing on employment prospects in the region. Spanish and Italian services PMI are due today, with both expected to show small improvements and possibly lead to euro gains. Euro zone retail sales is also due and might have a significant impact on euro movement.

GBP

The pound had a mixed performance, despite weaker than expected construction PMI. The figure fell from 64.2 to 61.4, worse than the estimated 63.5 figure. For today, the services PMI is up for release and it might show a dip from 58.7 to 58.5. Stronger than expected data could allow the currency to recover while weak results could lead to further declines.

CHF

The franc took advantage of dollar weakness as it was able to follow the footsteps of the euro. Swiss CPI is due today and a 0.1% decline in price levels is expected to follow the previous month’s 0.1% uptick. Other than that, risk sentiment might continue to drive franc price action.

JPY

The yen was able to make a small recovery to its counterparts as some Japanese officials declared that the currency has already weakened too much. Earlier today, Japan’s average cash earnings report came in weaker than expected, resulting to a fresh round of selling for the Japanese currency. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were able to bounce back in recent trading, despite another decline in the GDT index and a worse than expected dairy auction. The Canadian dollar was in a much weaker spot, thanks to a sharp decline in price levels spurred by Saudi Arabia’s decision to cut oil prices in the US. New Zealand employment change was stronger than expected at a 0.8% quarterly gain and a drop in the jobless rate from 5.6% to 5.4%. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 6, 2014)

USD

The US dollar advanced to the pound and most of its major counterparts in recent trading, as data from the US came in mixed. The ADP non-farm employment change figure saw a 230K gain versus the estimated 214K increase while the previous month’s reading was revised higher. The ISM non-manufacturing PMI showed a lower than expected reading though, as the figure fell from 58.6 to 57.1. Despite that, traders still seem to be gearing up for an upside NFP surprise later this week. For today, initial jobless claims and preliminary non-farm productivity and labor costs data are due.

EUR

The euro revisited its previous lows to the dollar, as euro zone retail sales showed a massive 1.3% decline instead of the projected 0.6% dip. The Spanish services PMI came in slightly weaker than expected while the Italian services PMI beat expectations. For now, traders might be bracing themselves for a downbeat ECB rate statement, although no actual changes are expected. Draghi might announce the actual scope and size of their ABS purchases, which many deem to be a form of quantitative easing.

GBP

The pound lost ground to its major counterparts when the UK printed a bleak services PMI reading. The figure fell from 58.7 to 56.2, reflecting a slower pace of expansion in the industry. The BOE is set to announce its monetary policy decision today and possibly keep rates and asset purchases unchanged. There is no press conference scheduled so traders might still wait for the minutes to be released a couple of weeks from now before deciding on their pound bias.

CHF

The franc gave up a bit of ground to the dollar despite better than expected CPI data. The report showed a flat reading instead of the projected 0.1% decline, easing deflation fears for a while. SECO consumer climate data is due today and a drop from -1 to -4 is expected, which would reflect increased pessimism. Other than that, the franc might also take its cue from euro price action for today.

JPY

The yen resumed its slide to its major counterparts, as the lack of data from Japan kept the currency weak. The BOJ minutes released earlier today seemed to spark another leg higher for yen pairs, as traders were reminded of the central bank’s dovish bias and deflation concerns. No other reports are up for release from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened to the dollar once more, weighed mostly by falling commodity prices. Apart from that, the Australian dollar lost ground earlier today as the jobs report reflected weakness in the sector, which saw downward revisions in previous data. Canadian Ivey PMI is up for release today and analysts are expecting to see an improvement from 58.6 to 59.2, which might be positive for the currency.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 7, 2014)

USD

Dollar traders are gearing up for the release of the October NFP report in today’s US trading session, which could show a slightly slower pace of jobs gains. However, leading indicators of employment such as the ADP non-farm employment change and labor components of ISM surveys seem to be hinting at an upside surprise. In that case, the US dollar might be able to extend its rallies to its forex counterparts as traders continue to price in an early rate hike from the Fed next year. Initial jobless claims was stronger than expected yesterday, although preliminary labor costs and non-farm productivity data missed the marks.

EUR

The euro got badly beated in yesterday’s London trading session, despite the lack of additional easing announcements from the ECB. Draghi reassured traders that the ECB is unanimous in its decision to shore up its balance sheet to 2012 levels, which might include pumping in 1 trillion EUR in the system. Apart from that, Draghi also stressed that the central bank is open to further easing in order to boost inflationary pressures. Only medium-tier reports, namely French and German industrial production, are due from the euro zone today and weak data might push the euro lower.

GBP

The pound was also in a weak spot in yesterday’s trading sessions, as the BOE seemed its usual dovish self. No interest rate changes or easing measures were announced, as traders were left waiting for the minutes of the policy meeting to be released next week before committing to their pound biases. As it is, the odds of a rate hike in early 2015 are looking slimmer as the BOE is grappling with a potential euro zone recession. Only the UK trade balance is up for release today and it might not be enough to give the pound a directional bias.

CHF

The franc took its cue from the euro and lost ground to most of its counterparts after the ECB announced its commitment to potential easing. Swiss SECO consumer climate also came in weaker than expected, as the index slipped from -1 to -11, lower than the estimated -4 figure. For today, Swiss unemployment rate, retail sales, and foreign currency reserves data are due and these might lead to more franc weakness if the actual results come up short.

JPY

The yen resumed its slide to the dollar but recovered to the euro in recent trading. Some Japanese officials are already cautioning on the potential repercussions of a very weak yen while others say that this could be positive for exports. No other reports are due from Japan today, with the yen looking at potential downside after the BOJ’s recent easing announcement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up further ground in recent trading, spurred by falling commodity prices and weak risk sentiment. It didn’t help that the recent Australian jobs report sparked more doubts on the survey methodology, as a strong headline reading still wasn’t enough to support the Aussie. In Canada, the Ivey PMI came in weaker than expected and set the tone for a weak employment release today. Chinese trade balance is up for release over the weekend this might lead to open price gaps next week.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 10, 2014)

USD

The US dollar gave up ground to its forex counterparts on Friday when the US non-farm payrolls figure missed expectations. Hiring picked up by 214K when analysts were expecting to see a 235K gain, although the jobless rate improved from 5.9% to 5.8% in the same month. Underlying labor components also showed improvements, as the participation rate stabilized while the under-employment rate ticked lower. Wage growth remains a concern, as average hourly earnings marked a mere 0.1% gain instead of the expected 0.2% increase. For today, there are no major reports up for release from the US.

EUR

The euro took advantage of dollar weakness in recent trading, as data from the euro zone wasn’t all disappointing. The German industrial production figure fell short of expectations with a mere 1.4% gain instead of the estimated 2.1% rebound while the French industrial production saw a flat reading instead of the projected 0.1% decline. Italian industrial production and euro zone Sentix investor confidence data are up for release today.

GBP

The pound made a strong recovery to the dollar on Friday, even though UK data was weaker than expected. The trade deficit widened from 9.0 billion GBP to 9.8 billion GBP, suggesting a weak export performance. For today, there are no major reports up for release from the UK, which suggests that consolidation could be seen or that risk sentiment might be the main driver of price action.

CHF

The franc advanced towards the end of the week, even though Swiss retail sales turned out to be a disappointment. The report showed a mere 0.3% gain instead of the projected 2.2% increase while the previous reading was downgraded to 1.4%. Foreign currency reserves declined while the jobless rate held steady at 3.2% as expected. There are no reports due from Switzerland today.

JPY

The yen recovered to the dollar, as the US jobs report headline figures were disappointing. Japanese officials’ comments on how the weak yen might result to economic damage also forced the currency to take a break from its dive. There are no reports up for release from Japan today, leaving risk appetite in the driver’s seat.

Commodity Currencies (AUD, NZD, CAD)

The comdolls all took advantage of dollar weakness last week, as profit-taking also took place. Canada saw a stronger than expected jobs report, with a hiring gain of 43.1K in October and a jobless rate decline from 6.8% to 6.5%. Earlier today, Australia’s home loans report showed a worse than expected 0.7% drop while Chinese CPI came in line with expectations at 1.6%. The PPI was weaker than expected though, as it marked a 2.2% drop and hinted of weaker price pressures down the line.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 11, 2014)

USD

The US dollar had a mixed performance as it regained ground to the pound, euro, and yen but continued to weaken to the rest of its counterparts. There were no reports released from the US yesterday, leaving risk sentiment as the main driver of price action. For today, there are still no reports due from the US as banks are closed on a holiday. Risk appetite could weaken and favor the US dollar as risks of a recession in Russia and geopolitical tension in eastern Ukraine weigh on higher-yielders.

EUR

The euro returned its recent wins to the dollar as euro zone economic data turned out to be disappointing. Industrial production in Italy fell by 0.9% instead of posting the estimated 0.2% rebound while the euro zone Sentix investor confidence reading marked a weaker than expected improvement. For today, there are no major reports out of the euro zone as most banks are also on holiday.

GBP

The pound weakened to most of its counterparts in recent trading sessions, despite the lack of data from the UK economy. Traders are probably pricing in expectations for Wednesday’s round of economic events, which include the release of the jobs report and the BOE inflation report. There are still no major events lined up from the UK today.

CHF

The franc also gave back its recent wins to the dollar, as the Swiss currency followed in the euro’s footsteps. There were no reports released from Switzerland then and none are due today, leaving market sentiment as the main driver of price action.

JPY

The yen resumed its slide to the dollar, as diverging monetary policy biases between the Fed and the BOJ took control of direction. There were no reports released from Japan yesterday, only comments from Japanese officials saying that the yen is excessively weak. However, emphasis on the likelihood of another sales tax hike next year was enough to drive the yen lower. For today, medium-tier data such as consumer confidence, preliminary machine tool orders and the Economy Watchers sentiment index are due.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar was dragged lower by downbeat inflation prospects in China, as producer prices in the world’s second largest economy saw a worse than expected 2.2% decline. Home loans in Australia slumped by 0.7% while the NAB business confidence index dipped from 5 to 4. Later on, the RBNZ financial stability report is due and a speech by RBNZ Governor Wheeler, with a downbeat outlook likely to drag the Kiwi down.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 12, 2014)

USD

The US dollar gave back some of its recent gains to its forex counterparts as US traders were off on a Veterans Day holiday yesterday. Risk sentiment appeared to improve as geopolitical risks faded and US equity indices soared to new highs, but the dollar could still draw strong support once uncertainty takes center stage once more. There are still no major reports up for release from the US economy today, which suggests that sentiment could continue to be a main driver of price action.

EUR

The euro bounced back to the dollar in recent trading but it remains to be seen whether the shared currency could hold on to its gains or not. There were no major reports released from the euro zone yesterday while today has the German wholesale price index and the euro zone industrial production reports on tap. Both reports are slated to show improvements from their previous readings, which might lend a bit more support for the euro.

GBP

The pound recovered to most of its major counterparts, as profit-taking took place prior to today’s big events. Only the BRC retail sales monitor was released from the UK yesterday and it showed a flat reading for October. Today, the UK claimant count change is due and it might show a strong 24.9K pickup in hiring, which could be enough to bring the jobless rate down from 6.0% to 5.9%. Also due today is the BOE inflation report, which would contain central bank economic forecasts. Any downgrades could lead to pound weakness as it might push back BOE rate hike expectations for later next year.

CHF

The franc continued to appreciate against the euro as traders incorporated the potential impact of a Swiss gold initiative, which would require the SNB to hold at least 20% in gold reserves. This could limit the central bank’s ability to intervene in the market if EURCHF tests the 1.2000 floor, as this would push the gold holdings ratio much lower. There are no reports due from Switzerland today though, leaving the franc sensitive to news regarding the gold initiative.

JPY

The yen resumed its drop to its major counterparts, as a few medium-tier data from Japan came in below expectations. The consumer confidence index slipped from 39.9 to 38.9 while the Economy Watchers sentiment index fell from 47.4 to 44.0. Earlier today, Japan’s tertiary industry activity index marked a 1.0% gain as expected and renewed a bit of confidence in the economy. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were in a good mood yesterday, as risk appetite was responsible for driving most of the financial markets price action. In today’s Asian session, Australia reported a 1.9% increase in its Westpac consumer confidence index, allowing AUDUSD to test the .8700 handle. There are no other reports lined up from the comdoll economies today, leaving risk sentiment mostly in control.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 13, 2014)

USD

The US dollar had a mixed performance as it gained ground to the European currencies and the yen while giving up gains to the commodity currencies. There were no reports released from the US economy yesterday, as Fed tightening expectations were mostly responsible for keeping the dollar afloat against most of its rivals. Only the initial jobless claims report is up for release today and analysts are expecting to see 282K in first-time claimants, higher than the previous 278K.

EUR

The euro moved mostly sideways to the dollar but ended lower, as data from the euro zone disappointed. Germany reported a 0.6% decline in its wholesale price index instead of the estimated 0.2% gain, reminding traders that deflation is a possibility in the region. Euro zone industrial production came in line with expectations of a 0.6% uptick. For today, German and French CPI readings are due, with negative readings expected. Worse than expected results could drive the euro much lower.

GBP

The pound suffered a sharp selloff in recent trading, as the UK jobs report disappointed and the BOE Inflation Report confirmed that a rate hike will be pushed back. Governor Carney cited further declines in inflation and threats to growth could delay tightening. Hiring picked up by 20.4K, lower than the estimated 24.9K increase, while the jobless rate was unchanged at 6.0%. Wage inflation picked up by 1.0% in the past three months though, higher than the projected 0.9% gain. There are no major reports out from the UK today.

CHF

The franc consolidated to most of its counterparts but managed to edge a bit higher to the euro on expectations regarding the gold initiative. This move might curtail the SNB’s ability to intervene in the currency market and keep the franc weak. There were no reports released from Switzerland yesterday while today has the PPI due. A figure weaker than the estimated 0.2% decline could lead to more franc weakness.

JPY

The yen resumed its slide to its counterparts as fresh uncertainties stemmed from Japan. News that Abe would dissolve parliament and call for a snap election next month led to yen volatility while his announcement regarding delaying the next sales tax hike gave the currency a bit of support. Data from Japan was mixed today, as the core machinery orders report marked a strong 2.9% gain while PPI missed the mark.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi seemed immune to RBNZ Governor Wheeler’s remarks regarding the overvalued currency, as traders focused on the relatively upbeat RBNZ Financial Stability Report. This indicated that lending restrictions won’t be relaxed just yet, which shows that the central bank is still confident in the housing recovery. Australia’s MI inflation expectations saw an improvement from 3.8% to 4.1%, adding to Aussie support. Later on, Chinese data on industrial production and retail sales might also have a strong effect on the comdolls.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 14, 2014)

USD

The US dollar was able to squeeze out small gains to its forex counterparts, extending its rally to the yen and the pound. Data from the US economy was weaker than expected though, with the initial jobless claims posting a larger than expected reading while JOLTS job openings fell short of expectations. The dollar might find a clearer direction for today, with the retail sales and consumer sentiment data up for release. Headline retail sales could show a 0.2% gain while the core version of the report might also print a 0.2% rebound. Consumer sentiment is expected to improve from 86.9 to 87.3 based on the University of Michigan survey.

EUR

The euro resumed its weak bout to the dollar in recent trading, even as CPI readings came in mostly as expected. In Germany, the CPI showed a 0.3% decline as expected, same as in the previous month. In France, the CPI stayed flat instead of posting a 0.1% decline. For today, the GDP figures from Germany and France might have a huge say in euro movement, as these could indicate whether the region might fall into recession or not. Both top economies are expected to show 0.1% growth while Italy might reflect a 0.1% contraction. Weaker than expected data could lead to more euro selling.

GBP

The pound continued to decline against most of its forex rivals, as the latest BOE inflation report and the change in central bank stance weighed on the currency. Only the RICS house price balance was released from the UK yesterday and it printed a weaker than expected 20% figure versus the projected 25% reading. For today, the quarterly construction output report is due and a 3.7% rebound is eyed to follow the previous 3.9% decline.

CHF

The franc still rallied to the euro in recent trading, prompting many to speculate about potential SNB intervention. However, the lack of jawboning from SNB head Jordan and his men suggest that the central bank hasn’t come up with alternative measures to weaken the franc in the event the gold initiative pushes through. Swiss PPI was better than expected at a 0.1% dip versus the projected 0.2% decline. There are no reports lined up from Switzerland today.

JPY

The yen resumed its drop to most of its counterparts, although it managed to advance against the pound. Japanese industrial production data was revised slightly higher but this did very little to shore up yen demand. There are no reports due from Japan today, as the currency might move to the tune of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were hit by risk aversion when China printed weaker than expected economic data. Chinese industrial production came in at 7.7% versus the projected 8.0% gain while retail sales fell from 11.6% to 11.5%. Despite that, Chinese President Xi Jinping said that there’s no reason to be alarmed as growh in the country is stabilizing. Only the Canadian manufacturing sales report is up for release today and a 1.3% gain is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 17, 2014)

USD

Profit-taking and risk appetite combined forces to weigh on the US dollar last Friday, even as the economy posted stronger than expected reports. Consumer spending picked up by 0.3%, as shown by the headline and core retail sales figures, while consumer confidence improved from 86.9 to 89.4. This sets the tone for stronger overall growth in the US, which could keep the Fed on track to taper sometime next year. For today, only the industrial production and capacity utilization reports are due.

EUR

The euro staged a strong recovery towards the end of the trading week, as the region managed to avoid posting a negative growth figure. Germany showed a 0.1% expansion while France chalked up stronger than expected 0.3% GDP growth, allowing the euro zone to post a 0.2% GDP reading for Q3. The final CPI also came in line with expectations at 0.4% instead of reflecting weaker inflationary pressures. Italian and euro zone trade balance are up for release today, along with a speech by ECB Governor Draghi.

GBP

The pound took a break from the recent selloff and made a small pullback to the dollar while consolidating to the yen. UK construction output was weaker than expected at 1.8% versus the estimated 3.7% increase for the third quarter. Earlier today, the UK Rightmove HPI indicated a 1.7% decline, weaker compared to the previous 2.6% gain. No other reports are up for release from the UK today.

CHF

The franc continued its advance against the dollar and the euro on Friday, still supported by hopes of a gold referendum and lower odds of SNB intervention. There were no reports released from Switzerland then, as the franc also drew support from the fact that the euro zone economy didn’t contract recently. For today, there are no reports due from the Swiss economy.

JPY

The yen gained ground during the release of the latest GDP report from Japan, as the economy fell back in recession, which lowers the odds of another sales tax hike next year. The economy contracted by 0.4% for Q3 while the previous quarter’s reading was downgraded from -1.7% to -1.8%. There are no other reports due from Japan today, leaving traders to price in expectations for Prime Minister Abe’s announcement regarding a snap election and delaying the tax hike.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained ground on risk appetite, as the Loonie got an additional boost from stronger than expected manufacturing sales data. The report marked a 2.1% gain versus the estimated 1.3% increase. There are no major reports due from the comdoll economies today, leaving risk sentiment at the driver’s seat of price action.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 18, 2014)

USD

The US dollar regained ground in recent trading, despite weaker than expected reports from the economy. Capacity utilization and industrial production missed the marks while the Empire State manufacturing index improved from 6.2 to 10.2, short of the estimated climb to 12.1. Data on producer price inflation is due today, with the headline figure likely to post a 0.1% dip and the core figure expected to show a 0.2% gain. Stronger than expected data could boost the U.S. currency while weak figures might lead to another short-term selloff.

EUR

The euro resumed its selloff to the dollar in yesterday’s sessions, as mixed reports came out of the region. Italy’s trade balance was slightly weaker than expected but the euro zone trade balance came in strong. Euro pairs might see more volatility today with the German and euro zone ZEW economic sentiment figures due. The German ZEW is slated to improve from -3.6 to 0.9 while the euro zone ZEW could climb from 4.1 to 4.3, reflecting small improvements in optimism. Stronger than expected figures could allow the euro to recover against its counterparts.

GBP

The pound carried on with its descent to most of its forex counterparts, as the sentiment from the latest BOE inflation report still weighed on the currency. The inflation figures are due today and might add support to the central bank’s dovish bias, as the annual CPI is slated to stay at 1.2% while producer prices are expected to show a sharper decline of 1.4%. Weaker than expected readings might worsen the pound’s slide.

CHF

The franc gave back some of its recent wins to the dollar but continued to edge higher against the euro, as there were no reports released from Switzerland yesterday. There are still no reports due from the country today, as the franc might take its cue from euro zone data.

JPY

The yen was back in selloff mode even after the recent GDP readings lowered the odds of seeing another sales tax hike next year. The economy contracted 0.4% in Q3, putting Japan back in recession. Prime Minister Abe is set to announce his plans for a snap election and the time frame for a sales tax hike and his remarks might have a strong impact on yen movement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent wins, as traders booked profits off key levels. Foreign direct investment slumped 1.2% in China, weighing slightly on the Australian dollar in today’s Asian session. The New Zealand dairy auction is scheduled today and another decline in the dairy index could lead to more losses for the Kiwi.

By Kate Curtis from Trader's Way