Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (Nov 19, 2014)

USD

The Greenback had a pretty good run in recent trading, as it advanced to most of its counterparts. Data from the US economy was better than expected, as the headline PPI marked a 0.2% increase in producer price levels versus the estimated 0.1% dip while the core CPI showed a 0.4% increase versus the projected 0.2% uptick. This indicates that inflationary pressures could continue to pick up and that the Fed might be able to move closer to hiking rates without worrying about deflation. The FOMC meeting minutes are up for release later and hawkish remarks could renew traders’ demand for the dollar.

EUR

The euro had a strong bounce in yesterday’s sessions, as ZEW figures beat expectations. The German ZEW improved from -3.6 to 11.5, reflecting a return in optimism. Meanwhile, the euro zone ZEW climbed from 4.1 to 11.0, outpacing the consensus at 4.3. For today, only the euro zone current account balance is due and it might not have such a huge impact on the shared currency’s price action.

GBP

The pound consolidated to the dollar but showed signs of heading further south, as UK inflation figures came in mixed. The headline CPI came in stronger than expected as it improved from 1.2% to 1.3% while the core CPI came in weak as it held steady at 1.5% instead of improving to the projected 1.6% figure. BOE minutes are up for release today and any shift to a more dovish stance among policymakers could lead to pound selling.

CHF

The franc was stuck in a very tight range to the euro as the EURCHF pair is inching very close to SNB intervention levels. While there have been no major updates on the gold initiative, rumors that the central bank is waiting with an order to sell francs at the 1.2000 mark was enough to keep the pair afloat so far. Swiss ZEW economic expectations data is due today and a strong improvement could lead to a franc rally.

JPY

The yen resumed its slide to the dollar and most of its counterparts as Prime Minister Abe confirmed that the snap election will take place in December and that the tax hike might be delayed. Traders are gearing up for another BOJ decision today and more dovish remarks are expected, as the Japanese economy slumped into recession in Q3.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent gains, as New Zealand’s dairy auction revealed another sharp drop in milk prices. This could mean more downside inflationary biases in the next few months, which could weigh on export revenues. New Zealand PPI figures are up for release in the next Asian trading session and there are no other major reports lined up from Australia and Canada.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 20, 2014)

USD

The US dollar enjoyed renewed demand as the FOMC minutes seemed more upbeat than usual. While there was a debate regarding dropping the “considerable time” wording in keeping rates low after easing ends, policymakers confirmed that inflation concerns have eased and that the US economy could stay resilient despite the ongoing downturn in the global economy. US CPI figures are up for release today and this could add support to the Fed’s improved inflation outlook, with policymakers projecting that annual CPI could soon reach target levels once more.

EUR

The euro managed to put up a strong fight in recent trading, thanks to stronger than expected current account data. The surplus widened from an upgraded 22.8 billion EUR to 30.0 billion EUR instead of narrowing to the projected 21.3 billion EUR figure. For today, the German and French manufacturing and services PMIs are up for release and these might dictate euro behavior for the rest of the week. Small improvements are eyed, with some figures likely to indicate stronger expansion in the industries.

GBP

The pound had a relief rally in yesterday’s London session since the BOE minutes weren’t as dovish as expected. A couple of policymakers still voted to hike rates during their meeting but inflation concerns outweighed their hawkish biases. UK retail sales data is up for release today and a 0.4% rebound is eyed to follow the previous 0.3% decline, which might allow the pound to extend its rally.

CHF

The franc continued to tread carefully against the euro in recent sessions, as traders awaited more clues regarding potential SNB intervention and the gold initiative. Swiss ZEW economic expectations saw an improvement from -30.7 to -7.6, reflecting a reduction in pessimism. Swiss trade balance is up for release today and a weak reading might renew clamor for SNB intervention, although the surplus is estimated to widen from 2.45 billion CHF to 2.57 billion CHF.

JPY

The yen lost further ground to its counterparts even as the BOJ didn’t announce any major changes to monetary policy. Governor Kuroda gained more support for their easing program, as only one member dissented in expanding the monetary base by an annual pace of 80 trillion JPY. Policymakers still retained their upbeat outlook for the economy and mentioned that there might be no need to delay the tax hike as the government needs revenue.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground recently, as Australia’s MI inflation expectations index stayed flat while New Zealand released weaker than expected PPI figures. Input producer prices marked a 1.5% decline instead of the projected 0.3% uptick while output producer prices saw a 1.1% drop instead of the expected 0.2% increase. Canadian wholesale sales data is due today and a stronger 0.7% increase is expected.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 21, 2014)

USD

The US dollar edged cautiously higher against most of its major counterparts, as data from the economy came in mixed. The headline CPI reading came in better than expectations of a flat figure instead of the projected 0.1% decline while the core CPI marked a 0.2% uptick as expected. The Philly Fed index also impressed as it surged from 20.7 to 40.8, reflecting a considerable pickup in manufacturing expansion. However, the flash manufacturing PMI fell from 55.9 to 54.7, suggesting that the industry wasn’t as strong as expected.

EUR

The euro seemed unfazed by the latest round of weak PMI figures from Germany and France, as the shared currency managed to hold steady against the US dollar. All the figures came in weaker than expected and reflected weaker expansion or a sharper contraction, with the exception of the French services PMI which was as expected at 48.8. This was enough to convince traders that a euro zone recession is still likely, although this scenario has long been priced in. ECB President Draghi is set to give a testimony today.

GBP

The pound had another quick bounce, thanks to stronger than expected UK retail sales data. Consumer spending picked up by 0.8% instead of the projected 0.4% increase, enough to make up for the 0.3% decline in the previous month. Only the UK public sector borrowing report is expected today and it might not have much of an impact on pound movement.

CHF

The franc gave up some of its recent wins to the euro as traders continued to speculate about SNB intervention. Swiss trade balance was actually better than expected at a surplus of 3.26 billion CHF versus the estimated 2.57 billion CHF while the previous reading was upgraded. There are no reports up for release from Switzerland today.

JPY

The yen continued its descent to its counterparts, although there was a bit of recovery seen at the start of today’s Asian trading session. Japan’s flash manufacturing PMI came in weaker than expected, leading many to agree that the economy is in for more weakness in the coming months. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls staged a decent recovery in recent trading sessions, as traders probably booked profits off key levels. New Zealand credit card spending picked up 6.7% recently, stronger than the previous 4.5% gain. For today, Canadian CPI figures are due and the headline figure could show a 0.3% decline while the core figure might print a 0.2% uptick.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 24, 2014)

USD

The US dollar had a mixed performance as it returned some of its gains to the yen and comdolls while gaining more ground to the European currencies. There have been no reports released from the US economy then, leaving risk sentiment as a major mover of price action. The surprise rate cut by the Chinese central bank did revive risk appetite for a bit as it spelled better global growth prospects. There are no major reports due from the US economy today.

EUR

The euro suffered a sharp selloff to its forex counterparts on Friday when Draghi spoke of being ready to do whatever it takes to boost inflation. While this is not much of a surprise, knowing that the euro zone is facing potential deflation and a recession, these remarks triggered a huge reaction since the ECB is set to have another policy statement in a couple of weeks. Traders are starting to price in actual quantitative easing or possibly another round of rate cuts from the central bank. Only the German Ifo business climate report is due today and the index is expected to fall from 103.2 to 103.0, with a weaker than expected reading likely to spark another euro selloff.

GBP

The pound also gave up some of its recent gains, as the public sector net borrowing report came in slightly worse than expected. The deficit came in at 7.1 billion GBP versus the estimated 6.9 billion GBP borrowing figure, although the previous month’s reading was upgraded. There are no reports due from the UK today.

CHF

The franc gave up its recent wins to the dollar as traders priced in the potential effect of further ECB easing on the SNB’s policy bias. EURCHF has moved slightly above its tight range as some expected the SNB to announce easing measures or currency intervention in reaction to Draghi’s statement, but so far there has been none. The Swiss employment level report is due today and an improvement from 4.20 million to 4.22 million is eyed.

JPY

The yen recovered on Friday, as traders booked profits off key levels and ahead of today’s Japanese holiday. There were no reports released from Japan then and none are due today, leaving risk sentiment as the main driver of yen price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gained ground on the PBOC’s surprise rate cut announcement, as many speculated that this could lead to stronger global growth prospects. Data from China has been disappointing recently and economists think that the world’s second largest economy would miss its 7.5% GDP target. Canadian CPI figures have surprised to the upside, lending more support for the Loonie.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 25, 2014)

USD

The US dollar had another mixed performance as it lost ground to the euro and franc, consolidated to the pound, and advanced against the yen and commodity currencies. The US currency appears to be acting as a counter currency for the time being, as risk sentiment also seems to be dictating price action. Data from the US was weaker than expected, as the flash services PMI fell from 57.1 to 56.3 instead of improving to the estimated 57.3 reading. For today, the US preliminary GDP and CB consumer confidence data are due. The GDP reading could be revised down from the initially reported 3.5% to 3.3% while the consumer confidence report might show an improvement from 94.5 to 95.9.

EUR

The euro recovered from its recent selloff, as traders probably booked profits off recent lows. Apart from that, the German Ifo business climate reading was stronger than expected, as it improved from 103.2 to 104.7 instead of falling to the estimated 103.0 reading. German final GDP and Italian retail sales data are up for release today, both of which aren’t expected to have a huge impact on euro price action.

GBP

The pound spent most of the trading day in consolidation, as traders are waiting for more clues from the UK economy. The BOE inflation report hearings are scheduled today and Carney might be set to explain why price pressures are weak and how he thinks it might fare moving forward. UK BBA mortgage approvals are also up for release and a decline from 39.3K to 38.5K is eyed.

CHF

The franc advanced to the dollar but stayed stuck in consolidation to the euro in recent trading sessions, as there have been no major reports out of Switzerland. There are still no reports lined up from the country today, leaving the franc at the mercy of risk sentiment.

JPY

The yen resumed its selloff mode today as Japanese traders returned from a holiday. The BOJ just released the minutes of their latest policy meeting, which indicated that some members are worried that the latest round of easing might not have such a strong effect on the economy as it did in the past. BOJ Governor Kuroda also gave a testimony in the early Asian session but his speech didn’t contain any surprises.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi suffered another round of selling in recent trading as China’s CB leading index showed a slight decline from 1.0% to 0.9% while New Zealand’s inflation expectations figure dipped from 2.2% to 2.1%. The Canadian dollar is still strong though, as the country is set to print its retail sales reports later on. Analysts expect to see strong figures, with the headline figure likely to rebound by 0.6% and the core figure to show a 0.4% uptick.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 26, 2014)

USD

The US dollar barely benefitted from the upgraded Q3 GDP reading from 3.5% to 3.9%, as forex pairs seemed to react to risk appetite. Components of the report showed that the upgrade was a result of strong consumer spending data and a pickup in business investment. Weaker CB consumer confidence also prevented the dollar from extending its gains, as the reading fell from 94.1 to 88.7 instead of improving to the estimated 95.9 figure. For today, US durable goods orders data is up for release, along with the core PCE price index.

EUR

The euro advanced to most of its forex counterparts, as there were no bleak reports from the euro zone. Germany’s final GDP reading was unchanged at 0.1% while Italian retail sales came in slightly weaker than expected at a 0.1% decline versus the projected 0.2% increase. Data on German import prices is up for release today and a 0.3% decline is expected.

GBP

The pound struggled to hold on to its recent wins yesterday, despite weaker than expected BBA mortgage approvals data and downbeat U.K. inflation hearings. BOE Governor Carney mentioned that the U.K.’s economic prospects might be weighed down by global economic weakness and geopolitical tensions. For today, the second estimate of the U.K. GDP is due and no change is expected from the previous 0.7% figure.

CHF

The franc continued its advance to the dollar and consolidation to the euro since there were no major reports released from Switzerland recently. For today, the UBS consumption indicator is due and an improvement from the previous 1.41 reading might lead to an extended franc rally.

JPY

The yen put up a strong fight in recent trading, as it advanced to most of its forex counterparts. BOJ minutes indicated that policymakers are worried that the impact of the latest round of easing might not be as strong as it was before. There are no reports up for release from Japan today, leaving yen pairs at the mercy of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance, with the Australian dollar falling sharply and the Kiwi and Loonie raking in a few gains. Canada’s retail sales report came in mixed, with the core figure staying flat instead of showing the projected 0.4% uptick and the headline figure marking a 0.8% increase. Earlier today, Australia’s construction work done for the third quarter saw a 2.2% decline versus the projected 1.7% drop and the previous 1.2% decrease. There are no reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 27, 2014)

USD

The US dollar didn’t fare so well in recent trading, as data from the economy came in mostly weaker than expected. Headline durable goods orders was the only report that showed strong results, with a 0.4% gain versus the estimated 0.4% decline. Core durable goods orders showed a 0.9% decline instead of the projected 0.5% uptick while initial jobless claims was worse than expected at 313K versus 287K. Personal spending and income both posted 0.2% gains, lower than the projected 0.4% increases. New home sales and pending home sales also missed their respective marks, along with the Chicago PMI and revised consumer sentiment figures. There are no reports due from the US economy today as traders are on Thanksgiving Day holiday.

EUR

The euro managed to recover against the dollar, as there were no reports released from the euro zone. For today, German preliminary CPI is due and is expected to show a flat reading after declining 0.3% in the previous month. Spanish flash CPI is also due, along with the German unemployment change report. Hiring is expected to pick up by only 1K in the euro zone’s largest economy and a weaker than expected increase might lead to euro losses.

GBP

The pound climbed steadily in recent trading, as data from the UK was mixed. There were no revisions to the second GDP estimate at 0.7% as expected while the CBI realized sales also came in close to expectations, marking a drop from 31 to 27. Preliminary business investment fell 0.7% in Q3 instead of showing the estimated 2.3% gain. There are no major reports due from the UK today.

CHF

The franc advanced to the dollar in recent trading, as there were no major reports from Switzerland while the US saw bleak readings. There are still no reports lined up from Swizterland today, although the franc might take its cue from euro zone data. Weak figures might also drive the Swiss currency lower while strong data could keep it afloat.

JPY

The Japanese yen held on to most of its recent gains since Japan didn’t print any new reports recently. Traders are still waiting for more clues from the economy and the BOJ before pricing in more easing expectations. For now, risk sentiment appears to be driving yen price action and the weak appetite for higher-yielders is benefitting the Japanese currency.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to recover to the dollar while weakening to the yen recently. Earlier today, Australia reported a stronger than expected 0.2% pickup in quarterly private capital expenditure instead of the estimated 1.7% drop. Only the Canadian current account balance is up for release from the comdoll economies today and this might not have such a huge impact on price action as most traders are off on a Thanksgiving holiday.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 28, 2014)

USD

The US dollar regained ground to most of its major counterparts even as there were no reports out of the US economy during the Thanksgiving day holiday. For today, there are still no top-tier reports lined up, which could leave dollar pairs sensitive to risk sentiment.

EUR

The euro gave up ground to the dollar in recent trading but managed to advance against the Japanese yen. Data from the euro zone wasn’t so bad, as the German preliminary CPI came in flat as expected while the unemployment change report indicated a 14K increase in hiring. For today, German retail sales and euro zone flash CPI figures are due, with weak figures likely to weigh on the shared currency.

GBP

The pound was in a weak spot recently, even though there were no reports released from the UK yesterday. Earlier today, the GfK consumer confidence reading came in weaker than expected as it refused to budge from the -2 figure instead of improving to the projected -1 reading. UK Nationwide HPI is up for release later and it might show a 0.4% increase in house prices.

CHF

The franc gave up ground to the dollar, as it was no match to the lower-yielder in recent trading. There have been no reports released from Switzerland yesterday and none are due today, leaving the Swiss currency sensitive to euro movements and risk appetite.

JPY

The yen suffered a sharp selloff in the Asian trading session, as data from Japan still reflected persistent weaknesses. Household spending marked a better than expected 4.0% decline versus the projected 4.8% drop and the previous 5.6% decline while retail sales showed a 1.4% increase, slightly below the estimated 1.5% growth. National core CPI fell from 3.0% to 2.9% while the Tokyo core CPI declined from 2.5% to 2.4%. Preliminary industrial production marked a 0.2% gain instead of the estimated 0.4% drop.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up their recent wins to the dollar when risk aversion and profit-taking took hold. Australia reported a stronger than expected private capital expenditure figure while Canada also impressed with a better than expected current account balance. Building consents in New Zealand picked up by 8.8% versus the previous 11.9% drop. Canadian monthly GDP is up for release later on.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 1, 2014)

USD

The US dollar regained ground to most of its forex counterparts on Friday, as traders booked profits ahead of the weekend. The currency was also given a boost by the results of the Swiss referendum, as the rejection of the gold initiative led to a drop in precious metal prices and a rally for the negatively correlated dollar. There were no reports released from the US economy on Friday while today has the ISM manufacturing PMI on tap. A drop from 59.0 to 57.9 is expected, which would reflect a weaker expansion in the industry.

EUR

The euro gave up ground to the dollar but rallied to the yen on Friday, as data from the euro zone came in line with expectations. Headline CPI fell from 0.4% to 0.3% while the core CPI held steady at 0.7%. The unemployment rate in the region also held steady at 11.5% as expected. Only the Spanish and Italian manufacturing PMIs are up for release today and these might not have such a large impact on euro movement, unless the results come in way off expectations.

GBP

The pound suffered another round of selling on Friday, as there were no reports to provide the currency any support then. The Nationwide HPI came in as expected at a gain of 0.3%. The manufacturing PMI is up for release today and a decline from 53.2 to 53.0 is expected, which would reflect a weaker industry expansion. Stronger than expected results could lead to a bounce for the pound while a weak reading could lead to a sharper decline. Net lending to individuals and mortgage approvals data are also due.

CHF

The franc sold off to its forex counterparts as traders priced in the results of the gold referendum on Sunday. The currency also suffered a sharp selloff at the start of this trading week since the results indicated a rejection of the proposal to keep 20% of gold in SNB holdings. SVME PMI is up for release today and a drop from 55.3 to 52.9 is eyed, which might lead to more franc weakness.

JPY

The yen resumed its slide to its counterparts towards the end of the week and gained more momentum this week. Quarterly capital spending came in stronger than anticipated at 5.5% versus 2.1% while the final manufacturing PMI stood at 52.0, a notch down from the initially reported 52.1 figure. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The fall in gold prices and oil led to a sharp decline for the commodity currencies on Friday and onto the start of this trading week. The results of the Swiss gold referendum triggered a sharp drop for gold, which led to a corresponding decline for AUD, while the OPEC decision also sparked CAD weakness. In Australia, company operating profits saw a stronger than expected 0.5% gain, which did little to support the Aussie. China reported a drop from 50.8 to 50.3 in its official manufacturing PMI, indicating a weaker expansion. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Dec 2, 2014)

USD

The US dollar returned some of its recent gains, mostly to the pound and the Japanese yen, even as the ISM manufacturing PMI showed stronger than expected results. The figure fell from 59.0 to 58.7, higher than the estimated drop to 57.9. Remarks from FOMC officials Dudley and Fischer were crucial for dollar movement, as their cautious remarks led to a bit of weakness. For today, there are no top-tier reports lined up, but Yellen and Brainard are set to give testimonies that might once again rock the dollar.

EUR

The euro made a bit of a recovery in recent trading, as recent PMI figures came in mixed. Spain’s manufacturing PMI climbed from 52.6 to 54.7, outpacing the consensus at 52.9. Italy’s manufacturing PMI held steady at 49.0 instead of improving to the estimated 49.5 reading. The Spanish unemployment change report is up for release today and it could show a smaller increase in joblessness of 21.3K versus the previous 79.2K, which might lead to a bit of euro strength.

GBP

The pound made a decent bounce to the dollar, despite mixed data from the United Kingdom. The manufacturing PMI climbed from 53.3 to 53.5 instead of falling to the projected 53.1 figure, indicating a stronger expansion in the industry. Net lending to individuals and M4 money supply were below expectations though, while the mortgage approvals reading came in line with expectations at 59K. Construction PMI is up for release today and it could show a dip from 61.4 to 61.1.

CHF

The franc made a slight recovery to the euro and the dollar after its aggressive selloff after the Swiss referendum over the weekend. Data from Switzerland was weaker than expected, as the SVME PMI fell from 55.3 to 52.1, worse than the projected fall to 52.9. There are no major reports due from Switzerland today.

JPY

The yen was a big loser at the earlier trading sessions but managed to recover to the dollar during the New York trading hours. There were no major reports out of Japan yesterday while today had the average cash earnings report due. This showed a weaker than expected 0.5% gain versus the projected 0.8% increase while the previous reading was downgraded from 0.8% to 0.7%. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a bit of a relief in the latter trading sessions, as oil and gold prices made a bit of a rebound. Earlier today, Australia reported an 11.4% gain in building approvals, more than twice as much as the estimated 5.2% increase. The RBA decision is scheduled today and might cause a ruckus among Aussie pairs if the central bank announces major changes. The New Zealand dairy auction is also scheduled today and might have a significant effect on Kiwi movement.

By Kate Curtis from Trader's Way