Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (July 9, 2013)

USD

The US dollar lost ground to most of its major counterparts in yesterday’s trading, as traders took profits off their positions from last week. EUR/USD rebounded off the 1.2800 area while USD/JPY dipped below the 101.00 mark. There were no reports released from the US yesterday and there are no big ones for today, as traders could position themselves early ahead of the FOMC meeting minutes release later on in the week.

EUR

The euro made a slight recovery against the US dollar while EUR/JPY moved mostly sideways below 130.00. The resolution of the conflict in Portugal, as the Prime Minister declared a cabinet reshuffle, and the approval of the bailout funds for Greece was enough to boost the euro even though data was weak. German industrial production showed a 1.0% decline instead of the estimated 0.5% dip while its trade balance showed a 14.1 billion EUR surplus, which is lower than the estimated 17.4 billion EUR surplus. There are no reports due from the euro zone today so keep tabs on updates regarding the ongoing ECOFIN meetings.

GBP

The pound rebounded from its previous lows against the dollar on Monday, as GBP/USD climbed back above 1.4900. There were no releases from the UK at the start of the week, but the country will be printing its manufacturing production and trade balance figures today. Manufacturing production could rebound by 0.5% after dipping by 0.2% in the previous month while the trade deficit is expected to widen from 8.2 billion GBP to 8.4 billion GBP.

CHF

USD/CHF gapped up over the weekend but the gap was quickly filled as the pair retreated on Monday. Swiss joblessness held steady at 3.2% and its retail sales report is due today. On an annualized basis, Swiss retail sales could see a 3.7% increase, better than the previous 3.3% figure. A better than expected reading could support the franc against the dollar and euro today.

JPY

The yen may have gained against the dollar on Monday but it lost to its other major counterparts as Japan still showed some signs of weakness. Current account surplus fell from 0.85 trillion JPY to 0.62 trillion JPY as expected while bank lending accelerated from 1.8% to 1.9%. The Economy Watchers Sentiment index slipped from 55.7 to 53.0 instead of just dipping to 55.6. No reports are due from Japan today.

Commodity Currencies (AUD, CAD, NZD)

The comdoll bunch managed to recover against the Greenback on Monday, buoyed by a rebound in commodity prices. The ongoing conflict in Egypt is boosting oil prices, as the possibility of a spillover in other Middle East countries could limit the production and supply of oil. Meanwhile, Canada printed stronger than expected building permits while New Zealand showed an improvement in business confidence. Australian NAB business confidence also saw a return to neutral territory from a -1 reading previously.

By Kate Curtis from Trader's Way

 

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Forex Major Currencies Outlook (July 10, 2013)

USD

Once again, the US dollar proved its strength against the euro and the pound. EUR/USD dipped to fresh lows around the 1.2775 area while GBP/USD fell below the 1.4900 handle. There were no major reports released from the US yesterday, as traders gear up for the release of the FOMC meeting minutes at 7:00 pm GMT today. Recall that the Fed announced its plans to reduce bond purchases at the end of the year, causing a huge dollar rally during their rate statement. The minutes of their policy meeting should shed light on the data that led them to this taper plan and if a lot of policymakers support the idea. If the minutes don’t contain much surprises, it could turn out to be a non-event for the dollar pairs.

EUR

The euro dropped to new lows against the dollar when euro zone debt concerns started popping up again. An ECB member said that the euro zone should be ready for more capital shortfalls, as the region could be in for more refinancing operations and a much longer period of low interest rates. Meanwhile, Italy suffered a downgrade from S&P, as the credit rating agency cited growth concerns. There are no major reports due from the euro zone today, which suggests that EUR/USD’s movement could be focused on the FOMC minutes.

GBP

The pound tumbled against the Greenback once more when British data disappointed. Manufacturing production fell by 0.8% in May, following the 0.2% decline seen last April. This was worse than the estimated 0.3% increase. Industrial production remained flat instead of climbing by 0.3% while the previous month’s figure was revised down to show a 0.1% decline. There are no reports due from the UK today, as traders could pay close attention to the FOMC minutes.

CHF

The franc lost ground to the dollar again as Swiss retail sales disappointed. Analysts predicted an increase from 3.3% to 3.7% but the actual figure showed a measly 1.8% annual increase for May. No reports are due from Switzerland today.

JPY

The yen had a mixed performance as it gained against the euro and pound but held steady against the dollar. Data from Japan has been mixed, as machine tool orders showed a 12.4% decline while tertiary industry activity showed a stronger than expected 1.2% increase. Consumer confidence came in worse though, as the reading fell from 45.7 to 44.3 instead of improving to 47.2.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies managed to score gains against the dollar, as AUD/USD climbed above the .9200 handle and NZD/USD broke out of its recent range. USD/CAD is holding steady above the 1.0500 handle, as the Loonie is supported by rising oil prices. Australian Westpac consumer confidence posted a 0.1% decline. New Zealand is set to print its Business NZ manufacturing index in the upcoming Asian session. No other reports are due from Canada and Australia.

By Kate Curtis from Trader's Way

 

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Forex Major Currencies Outlook (July 11, 2013)

USD

The US dollar was sold off heavily in yesterday’s US session, as the minutes of the FOMC meeting showed that there was a lot of dissent surrounding the proposed stimulus taper schedule. Not all policymakers agree that the central bank should start reducing the level of its bond purchases by the end of the year, as improvements in the labor market are not that significant enough. USD/JPY fell back below the 100.00 level while EUR/USD climbed above the 1.3000 handle. The initial jobless claims release is the only event from the US today.

EUR

The euro was able to stage a successful rebound against the dollar in yesterday’s trading, as the FOMC minutes turned out to be a bit of a surprise. As for data, medium-tier reports printed weaker than expected results, with the French industrial production report showing a 0.4% decline. Manufacturing production also posted a decline while their current account deficit widened. More medium-tier reports are due from the euro zone today but this might not be enough to derail EUR/USD from its recent rallies.

GBP

The pound recovered against the US dollar in yesterday’s trading, as the FOMC minutes disappointed the dollar bulls. There were no reports released from the UK and none are due for today. The only event on the UK schedule is the speech by MPC member Miles, and this should shed some light on whether he supports Carney’s pledge of keeping monetary policy loose for the foreseeable future.

CHF

The franc rallied against the Greenback in yesterday’s trading, pushing USD/CHF down by more than 300 pips. There were no reports printed from Switzerland then and none are due today, leaving USD/CHF vulnerable to dollar behavior.

JPY

The yen managed to pocket huge gains against the US dollar yesterday, eventually pushing USD/JPY down the 100.00 level and back to the 98.50 area of interest. Earlier today, the BOJ had its monetary policy announcement and Governor Kuroda made no changes to its current level of easing.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies outpaced the Greenback yesterday, with USD/CAD breaking below the 1.0500 barrier and AUD/USD climbing back above .9200. New Zealand’s manufacturing index showed a drop in industry activity but this wasn’t enough to derail the Kiwi’s rally against the dollar. Australia’s jobs report came in mixed, with a better than expected employment change reading of 10.3K but a worse than expected jobless rate of 5.7%. No other reports are due from the comdoll economies in the upcoming trading sessions.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 12, 2013)

USD

The US dollar had a mixed performance in yesterday’s trading as it lost ground to the euro and pound, but managed to score gains against the Australian dollar and New Zealand dollar. There were no major reports released from the US yesterday, only the initial jobless claims which showed a higher than expected increase in first-time claimants. However, analysts noted that this might just be an effect of the Fourth of July holiday. For today, the PPI and UoM consumer sentiment figures are due, and upbeat figures could renew demand for the US dollar.

EUR

There were no red flags on the euro zone’s calendar in yesterday’s trading, allowing the euro to regain ground against the US dollar. There are no major reports again today, except perhaps for the euro zone industrial production release. This is expected to show a 0.2% downtick after increasing by 0.4% last month.

GBP

The pound was one of the better performing currencies in yesterday’s trading as it managed to make a strong recovery against the US dollar. There were no reports released from the UK, but the country is set to print its CB leading index today. A 0.2% increase was seen last time and another increase could help lift the pound higher against its counterparts.

CHF

The Swiss franc continued to gain against the Greenback in yesterday’s trading, despite the lack of data from Switzerland. The Swiss economic schedule is empty again for today, which suggests that the franc might be able to benefit from dollar weakness if it persists until the end of the week.

JPY

The yen was mostly stuck in consolidation for yesterday as there were no major reports released from Japan. The BOJ statement turned out to be a non-event as Kuroda didn’t announce anything special for their monetary policy. Only the revised industrial production report and BOJ monthly report are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi suffered huge losses against the dollar in yesterday’s trading as weaknesses in China continued to dampen sentiment for commodity-dependent nations. Australia’s jobs report printed better than expected results of 10.3K instead of the mere 0.3K increase expected. However, its home loans report missed the mark and showed a 1.8% rise instead of the estimated 2.3% growth. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

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Forex Major Currencies Outlook (July 16, 2013)

USD

The US dollar lost its legs in yesterday’s trading as it was weighed down by weaker than expected US retail sales. The headline figure posted a mere 0.4% uptick while the core version of the report showed a flat reading. This was lower than the estimated 0.7% increase in headline retail sales and the projected 0.5% growth in core retail sales. Apparently, US consumers cut back on purchases of gadgets and food while upping spending on automobiles and home furnishings. For today, the CPI figures are due and consumer price levels are expected to rise by 0.3% while core price levels could show another 0.2% increase.

EUR

EUR/USD was mostly stuck in consolidation for yesterday’s trading as there were no major reports released from the euro zone. German and euro zone ZEW figures are due today and small improvements are expected. German ZEW economic sentiment could climb from 38.5 to 39.8 while the region’s figure is slated to rise from 30.6 to 31.8, reflecting a rise in optimism.

GBP

The pound was off to a weak start in the Asian session but soon found support at the 1.5050 minor psychological level before rebounding back to the 1.5100 area. There were no economic reports released from the UK, as the country is set to print its CPI figures today. Annual inflation is set to climb from 2.7% to 3.0%, way above the central bank’s 2% inflation target. This should mean that the BOE would have less scope for monetary policy easing, which might be positive for the pound in the near term.

CHF

The Swiss PPI report fell below expectations as it showed a mere 0.1% uptick in producer price levels. However, the franc still managed to hold on to its recent gains against the dollar, as USD/CHF stayed around the .9500 handle. There are no major reports from Switzerland today, which suggests that USD/CHF action could be mostly dependent on US data.

JPY

Even though Japanese traders were on a holiday yesterday, the yen managed to score gains against the US dollar mostly during the New York session. There are no reports due from Japan again today, which suggests that the movement of yen pairs could be dependent on currency-specific data.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar was bogged down by weaker than expected Chinese GDP in yesterday’s Asian session, as the country grew by only 7.5% for the second quarter. Meanwhile, quarterly inflation in New Zealand also disappointed, as the figure showed a mere 0.2% uptick instead of the estimated 0.3% rise. Canadian manufacturing sales are on tap for today and a 0.7% rebound is eyed to follow the 2.4% drop recorded previously.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 17, 2013)

USD

The US dollar had a mixed performance yesterday, as it lost ground to some counterparts but managed to advance against others. US CPI was mostly in line with expectations, as the core figure printed the estimated 0.2% uptick while the headline CPI showed a higher than expected 0.5% increase. Industrial production was better than expected at 0.3% while capacity utilization came in line with consensus at 77.8%. US building permits and housing starts are due today but the bigger market mover could be Fed head Bernanke’s speech, as the Chairman is expected to set the record straight regarding the stimulus taper plan.

EUR

EUR/USD broke to the upside in yesterday’s trading, as the pair landed back above the 1.3100 handle. Data from the euro zone was mixed, as the German ZEW disappointed while the euro zone ZEW was better than expected. The German ZEW figure dipped from 38.5 to 36.3 while the euro zone ZEW reading climbed from 30.6 to 32.8. Only the German bond auction is scheduled for the euro zone today.

GBP

The pound had a choppy trading day, as the UK CPI release did very little to provide direction for pound pairs. The actual figure fell a little short of consensus at 2.9%, higher than the previous 2.7% reading. For today, the claimant count change is up for release and it is slated to show a 7.5K decline in unemployment claimants for June. Also due today is the MPC votes for asset purchases and interest rates, and it would be interesting to see how Carney voted in this meeting.

CHF

No reports released from Switzerland yesterday yet the franc still managed to post some gains against the US dollar. For today, the Swiss ZEW economic expectations report is due and it is expected to show an improvement from the previous 2.2 reading.

JPY

The yen gained against the dollar but lost ground to the pound in yesterday’s trading. EUR/JPY managed to stay stuck in consolidation though. Only the monetary policy meeting minutes were released from Japan and it revealed that BOJ policymakers are starting to see some notable improvements in the Japanese economy. There are no reports due from Japan for the next 24 hours, which suggests that the movement of yen pairs could depend on currency-specific events.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar got a strong boost from the RBA minutes, which showed that the central bank is happy that the Aussie depreciation is contributing positively to economic activity. Only medium-tier business sentiment data is due from Australia in the coming trading hours while Canada is set for the BOC interest rate decision. This is Poloz’s first rate statement so it should be indicative of how monetary policy will fare in the future.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 18, 2013)

USD

The US dollar experienced a lot of volatility during the US session, as Ben Bernanke’s speech had a confusing impact on dollar pairs. At first, the transcript of his speech was interpreted by some market watchers to say that the Fed’s stimulus taper plan by the end of the year is still uncertain. However, when the press conference took place and Bernanke was able to clarify some remarks, the markets realized that the central bank is still on track to reduce bond purchases by Q4, as long as inflation and employment continue to improve. As for data, building permits and housing starts both disappointed. For today, initial jobless claims and the Philly Fed index are due.

EUR

The euro consolidated against the dollar for most of the day then encountered additional volatility during the New York session. In the euro zone, the Bank of Italy reduced its growth forecasts for the year, adding to selling pressure on the euro. Only the current account balance release and the Spanish bond auction are scheduled for the euro zone today.

GBP

The pound managed to score huge gains in yesterday’s trading sessions as the MPC vote turned out better than expected. Apparently, MPC members voted unanimously to keep interest rates and asset purchases unchanged, different from the expected 2-0-7 vote or the previous 3-0-6 vote. It appears that the improvements in the UK economy have convinced some dovish members to decide that the current level of monetary policy is appropriate. Claimant count change figures also came in better than expected and showed a larger decrease in claimants for June. UK retail sales are up for release today and a 0.2% uptick is expected.

CHF

The franc was unable to hold on to most of its gains against the dollar, as USD/CHF landed back above the .9400 handle. Swiss ZEW economic expectations improved from 2.2 to 4.8 but Bernanke’s speech had a bigger impact on the pair’s movement. For today, Swiss trade balance is up for release and it isn’t likely to have a strong effect on the franc’s direction.

JPY

The yen lost ground to its counterparts when the BOJ minutes revealed that policymakers are in disagreement when it comes to retaining long-term bond purchases as part of their stimulus efforts. For some, this is necessary in controlling volatility in Japanese markets but others cautioned that it could lead to a spike in borrowing costs later on. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls lost ground to the dollar in yesterday’s trading, as Bernanke confirmed that the Fed is still on track to reduce bond purchases. The Australian dollar got a heavier blow earlier today when the NAB quarterly business confidence figure sank from 2 to -1. As for Canada, the BOC kept monetary policy unchanged although Poloz did alter some of the lines in the previous statements. In addition, he adopted forward guidance by giving the markets some clues as to when they could start normalizing interest rates. There are no other reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 19, 2013)

USD

The dollar regained ground when the US printed better than expected Philly Fed manufacturing data, with the index climbing from 12.5 to 19.8 instead of dipping to the consensus of 8.5. This goes to show that the Fed is still on track to taper in September and the economy could draw support from the manufacturing sector. Initial jobless claims were also better than expected at 334K, lower than the estimated 344K reading. No reports are due from the US today but be wary of profit-taking prior to the weekend’s G20 meetings.

EUR

Euro zone’s current account balance was weaker than expected, with the surplus shrinking from 23.8B to 19.6B. The ECB decided to ease collateral rules for acceptable asset-backed securities in hopes of spurring lending further. Medium-tier reports such as German PPI and Spanish housing price index are on tap from the euro zone today, both of which are unlikely to spur one-directional moves from euro pairs.

GBP

UK retail sales came in line with consensus as the report showed a 0.2% uptick. This was weaker than the previous 2.1% increase, but the positive figure was still able to lift the pound. Only the public sector borrowing report is due from the UK today, and given the state of their finances, it would be helpful to see a decline in the public deficit. Otherwise, the pound might give up some of its gains.

CHF

Swiss trade balance was better than expected at a surplus of 2.73B CHF, higher than the estimated 2.41B CHF. The previous month’s figure was revised to 2.12B CHF though. No reports are due from Switzerland today so we might see sideways movement for franc pairs.

JPY

The yen lost more ground to its counterparts in yesterday’s trading as Abe’s political party showed a strong lead in early polls. This means that Japan could be in for more aggressive structural reforms, which would include policies to keep the yen weak. All industries activity data is on tap for today and weak figures could lead to further yen weakness.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies struggled to hold on to their recent gains against the dollar, with the Canadian dollar showing some success. Canadian wholesale sales were much better than expected at 2.3%, higher than the estimated 0.4%, while the previous month figure enjoyed an upward revision. Meanwhile, Australian CB leading index was flat and the NAB quarterly business confidence report dipped from 2 to -1. Credit card spending in New Zealand rose by 5.4%, which helped lift the Kiwi. Canadian CPI data are up for release in today’s US session.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 22, 2013)

USD

The US dollar lost ground to most of its major counterparts on Friday, as EUR/USD broke out from its consolidation and reached the 1.3150 area. There were no reports released from the US then, as the selloff was possibly a result of profit-taking ahead of the weekend’s G20 Summit. There were no surprises from the actual meetings, although the leaders did pledge to push for a banking union in Europe. For today, only the existing home sales is up for release from the US and it is set to show a reading of 5.27 million, up from the previous 5.18 million figure.

EUR

The euro edged higher against its counterparts on Friday as German PPI came in better than expected. Producer prices in euro zone’s largest economy stayed flat instead of falling by the estimate of 0.2%. This was also better than the previous reading of -0.3%. However, Spain posted a huge decline in house prices for the past quarter as the HPI showed a reading of -2.4%. There are no reports due from the euro zone today.

GBP

The pound made some gains against the Greenback on Friday, pushing GBP/USD closer to the 1.5300 handle. Public sector borrowing in the UK was higher than estimated, as the actual reading showed a 10.2 billion GBP deficit. On top of that, the previous month’s report was revised to show a larger public deficit of 12.4 billion GBP. There are no reports due from the UK today.

CHF

The franc managed to extend its wins against the US dollar on Friday, as there were no reports released from both the US and Switzerland then. USD/CHF edged below the .9400 handle and appears to be headed lower for the week. There are no reports due from Switzerland today.

JPY

The yen edged lower against its counterparts on Friday but managed to recover in today’s Asian session as Japanese Upper House elections showed that Prime Minister Abe’s party is set to take majority of the seats. All industries activity index printed a 1.1% increase, lower than the estimated 1.3% increase. The previous figure was also revised lower. There are no reports set for release from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies moved mostly sideways on Friday but managed to end a little higher against its lower-yielding counterparts. Canadian core CPI showed a 0.2% decline while the headline CPI came in below expectations and printed a flat reading. No reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (July 23, 2013)

USD

The US dollar was off to a weak start for the week, as the existing home sales report turned out to be a disappointment. The actual report posted a 5.08 million figure instead of the estimated 5.27 million reading. This was also lower than the previous 5.18 million figure. For today, only the Richmond manufacturing index is due from the US and while this doesn’t normally induce a strong reaction from the dollar, it could leave a lasting impact today. After all, it is the only US release on deck. The reading is slated to dip from 8 to 7 but a strong reading could be positive for the dollar.

EUR

The euro managed to score more gains against the US dollar in yesterday’s trading but it gave way to yen strength. In Portugal, the coalition government was still unable to reach an agreement yet Silva announced that early elections are no longer necessary. There are no major reports due from the euro zone today, as the only release is the consumer confidence report. The figure is expected to post a small improvement from -19 to -18, which could still be positive for the euro.

GBP

The pound was able to end the day higher against the US dollar and euro while struggling to hold on to its recent gains against the yen. There were no reports released from the UK yesterday but the upbeat sentiment from the previous week’s release of monetary policy votes. BBA mortgage approvals are up for release today and a 38.5K figure is expected, which is higher than the previous 36.1K reading. A strong figure could allow the pound to extend its rallies.

CHF

There were no reports released from Switzerland yesterday yet the franc managed to score gains against the dollar, which was sold off because of weak existing home sales. There are no reports again from the Switzerland today, which could mean quiet trading for USD/CHF as there are no major reports from the US.

JPY

The yen continued to benefit from the recently concluded elections in Japan, which showed that Abe and his party was able to secure a landslide victory. There are no reports due from Japan today, which suggests that the yen could be in for quiet trading or could be sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were able to benefit from the rise in commodity prices on Monday, as AUD/USD climbed past the .9200 handle while USD/CAD broke below the short-term support. Canada is set to print retail sales data today and small improvements are expected while New Zealand will release its trade balance in the upcoming Asian session. A trade deficit of 102 million NZD is expected to follow the previous 71 million NZD surplus, which might be negative for the Kiwi.

By Kate Curtis from Trader's Way