Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Oct 23, 2014)

USD

The US dollar continued to assert its dominance in the forex market, as risk aversion stayed in the markets. Data from the US economy came in mixed, with the core CPI coming in short of expectations with a 0.1% uptick instead of the projected 0.2% gain and the headline CPI beating the consensus of a flat reading and showing a 0.1% increase. US initial jobless claims and flash manufacturing PMI are due today, both of which could drive short-term dollar price action. Risk sentiment remains in the driver’s seat and continues to keep the safe-haven currencies strong.

EUR

The euro gave up more ground to the dollar in recent trading sessions, even though there were no weak reports printed from the euro zone. For today, the German and French PMI readings could determine whether or not the shared currency has a shot at recovering. However, analysts predict that the manufacturing and services sectors of these top two euro zone economies might continue to show more weakness and sharper contractions. Lower than expected results could remind traders of the looming euro zone recession and push the currency down.

GBP

The pound also weakened in recent trading when risk aversion set in. As expected, the BOE minutes indicated why policymakers appeared less hawkish than usual, as most members of the committee became more concerned about the impact of a euro zone recession on the UK economy. Two policymakers still voted to hike rates this month while the decision to keep asset purchases unchanged was unanimous. UK retail sales, BBA mortgage approvals, and CBI industrial order expectations are up for release today.

CHF

The franc took its cue from the euro and gave back its recent gains to its counterparts, as there were no major reports from Switzerland to give the franc direction yesterday. There are still no reports due from the country today so the franc could react strongly to euro zone PMI releases, with weak data likely to weigh on the Swiss currency as well.

JPY

The yen took advantage of the run in risk aversion recently, as the lower-yielding currency recovered to the euro and the pound. Japan’s flash manufacturing PMI came in stronger than expected at 52.8 versus the projected 52.1 figure and up from the previous 51.7 reading. No other reports are due from Japan, with risk sentiment likely to give yen pairs direction.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground on risk aversion, as the Loonie saw a little more volatility due to Canadian economic releases. The retail sales report churned out weaker than expected readings yet the Loonie drew support from the BOC’s decision to drop their “neutral” wording in their rate statement. This was interpreted to be a hawkish sign, although their actual statement still contained hints of caution. Earlier today, New Zealand reported a weaker than expected quarterly CPI of 0.3% versus 0.5%, causing a massive Kiwi selloff. BOC Governor Poloz is set to testify today while New Zealand will release its trade balance later on.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 24, 2014)

USD

The US dollar moved sideways in recent trading, as major pairs were stuck at key levels. Data from the US was mostly weaker than expected, with the initial jobless claims showing a larger than expected 283K increase versus the projected 269K figure. The flash manufacturing PMI saw a drop to 56.2 for October while the previous reading was downgraded. US new home sales data is up for release today and it might show a decline from 504K to 473K, which might lead to a bit of dollar weakness.

EUR

The euro recovered slightly to the dollar and advanced to the yen in recent trading, as euro zone manufacturing and services PMI came in better than expected. Flash manufacturing PMI improved from 50.3 to 50.7 while the services index held steady at 52.4 instead of dipping to 52.0. In Germany, the manufacturing PMI landed back above 50.0 and reflected industry expansion while France saw more weakness in both manufacturing and services. German GfK consumer climate data is due today and this might dictate euro price action for the rest of the day. A drop from 8.6 to 8.1 is expected.

GBP

The pound was on weak footing yesterday since UK retail sales showed weaker than expected results. Consumer spending fell by 0.3% in September, worse than the estimated 0.1% dip. BBA mortgage approvals was also weaker than expected, as the reading fell from 41.4K to 39.3K. UK GDP is up for release today and another disappointment might lead to more pound weakness, as this would validate concerns that the BOE isn’t ready to tighten policy next year.

CHF

The franc moved sideways to the dollar, as there were no major reports from Switzerland. The currency did gain a bit of support from improved euro zone PMI, which was enough to keep it steady for the most part. For today, there are still no reports due from Switzerland, which suggests that euro zone data or risk sentiment could drive franc movement.

JPY

The yen lost ground as risk appetite improved in recent trading and BOJ Governor Kuroda admitted that yen weakness is helping the economy achieve its inflation target. He also mentioned that their recent review of falling energy prices suggest that inflation could fall back to 1% and that the Japanese central bank might need to implement further stimulus. There are no major reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi lost further ground in recent trading since New Zealand’s trade balance came in weaker than expected. The deficit widened from 489 million NZD to 1350 million NZD, suggesting weaker export activity. There are no reports due from the rest of the comdoll economies today, leaving the currencies sensitive to risk sentiment and potential profit-taking.

By Kate Curtis from Trader's Way

 

[jeff b]

Thanks for these updates. As I read them I wonder what the price high , low, and range were for the day and volume.

 

[katetrades]

Forex Major Currencies Outlook (Oct 27, 2014)

USD

The US dollar gave back some of its recent gains on Friday as data from the US economy came in weaker than expected. New home sales came in at 467K, short of the 473K consensus, while the previous month’s reading was downgraded to 466K. Pending home sales data is due today and a 1.1% rebound is eyed to follow the previous month’s 1.0% decline. Weaker than expected figures might cause another round of dollar selling.

EUR

The euro made a bit of a recovery on Friday, as traders booked profits ahead of the release of the euro zone banking stress test results. As it turned out, 25 out of 123 banks failed the test, mostly in Italy. This indicates that some banks have a few months to come up with the necessary funds to cover their shortfall or else run the risk of failing if a recession takes hold. German GfK consumer climate ticked up from 8.4 to 8.5 instead of falling to 8.1, providing a bit of hope for the consumer sector in euro zone’s largest economy. German Ifo business climate is due today and a dip from 104.7 to 104.6 is expected.

GBP

The pound also made a strong bounce at the end of the week, as the preliminary UK GDP reading came in line with expectations of 0.7% growth. To top it off, the previos quarter’s reading was upgraded to show a 0.9% expansion. UK CBI realized sales is due today and it might show a drop from 31 to 29, which might be taken negatively by the pound.

CHF

The franc recovered to the dollar last week, despite the lack of top-tier data from Switzerland. There are still no reports due from the country today, leaving traders to focus mostly on euro zone data and its potential effect on the Swiss economy and SNB monetary policy. Risk sentiment might also be a key mover for the franc pairs today.

JPY

The yen lost ground on Friday, as BOJ Governor Kuroda admitted that there might be need for more easing should the economy fail to meet its inflation target. He pointed out that falling energy and commodity prices might drag overall price levels back below 1%, farther away from their 2% goal. There are no reports due from Japan today, which suggests that this shift in BOJ stance might keep pushing the yen lower.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to take advantage of dollar weakness on Friday, as AUDUSD consolidated while NZDUSD gave up more ground. There were no reports released from these economies then and there are no major ones on tap for today, indicating that risk sentiment might be the big mover for these currencies.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (October 28, 2014)

USD

The US dollar had a mixed performance recently, as it gained ground to the yen but gave up some gains to the pound and the euro. Pending home sales was weaker than expected with a mere 0.3% uptick instead of the estimated 1.1% gain. US durable goods orders data is due today, with the headline figure expected to show a 0.4% gain following the previous 18.4% drop and the core figure likely to show a 0.5% uptick. Weaker than expected data could indicate that the US economy is starting to slow down and might lead to dollar selling.

EUR

The euro made a bit of recovery recently even as the German Ifo business climate report came in weaker than expected. The index slipped from 104.7 to 103.5, way below the estimated 104.6 reading. This indicates that business sentiment has weakened considerably in the euro zone’s largest economy. Data on German import prices is due today and might indicate if the region is in for more deflationary pressures, which might then cause euro weakness.

GBP

The pound continued its steady ascent in recent trading, as UK CBI realized sales showed an improvement. The reading held steady at 31 instead of dipping to the estimated 29 figure. There are no reports due from the UK today, which suggests that the pound might be in for a bit of consolidation.

CHF

The franc advanced to the dollar despite the lack of data from Switzerland yesterday, suggesting that the currency simply took its cue from the euro. There are still no major reports lined up from Switzerland today, which means that consolidation might be seen unless there’s a huge change in market sentiment.

JPY

The yen was still in for a bit of weakness at the start of the week, as traders priced in the odds of additional BOJ easing. Last week, BOJ Governor Kuroda said that the country might have trouble meeting its inflation target since commodity and energy prices keep falling. Earlier today, the retail sales report showed a stronger than expected 2.3% gain, enough to reassure some traders that more stimulus isn’t necessary.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued their struggle, as though awaiting more clues from market and risk sentiment. AUDUSD was still moving sideways while the Loonie gave up some of its gains to the yen and held steady to the dollar. There were no reports from the comdoll economies yesterday and none are lined up today, suggesting that market sentiment might be a major driver or that pairs could stay stuck in consolidation for the time being.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 29, 2014)

USD

The US dollar gave up ground to most of its major counterparts, with the exception of the Japanese yen, in yesterday’s trading sessions. Durable goods orders data came in below expectations, with the headline figure showing a 1.3% decline and the core figure showing a 0.2% drop. Analysts expected a 0.4% and 0.5% gain respectively. The big mover for the US dollar today would be the FOMC statement, during which the Fed might give hints on when they could start hiking interest rates. Dovish remarks similar to their previous statement could drive the dollar lower.

EUR

The euro made a bit of recovery to the dollar and yen as German import prices came in stronger than expected and posted a 0.3% uptick. There are no major releases from the euro zone today, leaving euro pairs sensitive to risk sentiment and the upcoming FOMC decision.

GBP

The pound edged higher in recent trading sessions, despite the lack of top-tier data from the UK. For today, net lending to individuals and mortgage approvals data are due, which might lead to small pound moves across the charts. Risk sentiment and the FOMC statement might be more influential to pound price action today, as the announcement could affect market risk sentiment.

CHF

The franc continued to advance to the dollar in recent trading, as the Swiss currency was lifted by improving German import prices, easing deflationary concerns in the continent. There are still no reports up for release from Switzerland today, leaving franc pairs vulnerable to risk sentiment.

JPY

The yen continued to lose ground, weighed down by recent remarks from BOJ Kuroda saying that the economy might see weaker inflationary pressures and that the central bank might need to implement more stimulus. Data from Japan has actually been stronger than expected, as retail sales and preliminary industrial production both beat expectations.

Commodity Currencies (AUD, NZD, CAD)

The comdolls showed more strength in recent trading, as AUDUSD made an upside break from consolidation while USDCAD showed more downside momentum. There have been no major releases from Australia, New Zealand, and Canada so far this week but it appears that improvements in risk appetite are starting to lift the higher-yielding currencies. The RBNZ statement is coming up and more remarks on the overvalued Kiwi could spark fears of intervention and drive the currency lower.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Oct 30, 2014)

USD

The US dollar made strong rallies after the FOMC statement, as the committee sounded more hawkish compared to their previous month’s announcement. Fed officials acknowledged the strong improvements in the labor sector, changing their wording to say that the under-utilization of resources has been gradually diminishing. The Fed also decided to end its QE program as expected while maintaining their pledge to keep rates low for a considerable time after easing ends. The US advanced GDP reading is up for release today and it might show a 3.1% expansion, slower compared to the previous 4.6% growth.

EUR

The euro gave up ground to the dollar but managed to hold on to its wins to the yen. There were no major reports released from the euro zone yesterday, leaving the shared currency sensitive to other economic events. For today, German and Spanish flash CPI readings are due, along with the Spanish flash GDP reading. Stronger than expected data could keep the euro afloat while weak readings might remind traders that another recession is likely.

GBP

The pound was in a weak spot to the dollar in recent trading while consolidating to most of its other counterparts. UK data was mostly weaker than expected, as mortgage approvals and net lending to individuals fell short of consensus. For today, only the UK Nationwide HPI is up for release and a 0.4% rebound in house prices is expected.

CHF

The franc return its recent wins to the dollar when the FOMC statement indicated that the Fed might still be ready to hike rates next year. There were no reports to keep the franc supported yesterday while today has the UBS consumption indicator and KOF economic barometer on tap. Both reports are expected to show improvements which might allow the franc to recover slightly.

JPY

The yen lost ground to most of its major counterparts, spurred mostly by the strong rally for USDJPY after the Fed statement. There have been no reports released from Japan then but the divergence in policy bias for the Fed and the BOJ supports an anti-yen bias. There are still no reports lined up from Japan today, as traders might price in expectations for Friday’s major reports.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were no match to dollar strength in yesterday’s US session, as the higher-yielders returned their recent wins and more. Canada’s underlying inflation reports came in weaker than expected, casting doubts on whether the BOC can maintain its upbeat assessment or not. The RBNZ decided to keep rates on hold at 3.50% as expected while Aussie import prices marked a 0.8% quarterly decline, both resulting to weakness for their respective currencies. There are no other reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader's Way

 

[katetrades]

Daily Forex Currency Outlook (Oct 31, 2014)

USD

The US dollar gave back some of its recent gains even though the US GDP reading was stronger than expected. The economy grew 3.5% in Q3, better than the estimated 3.1% growth figure but weaker compared to the previous 4.6% expansion. Components of the report showed that most of the gains were spurred by government spending, although there were notable improvements in export activity as well. Medium-tier data (personal spending and income, core PCE price index, and Chicago PMI) are up for release today, with strong data likely to spur more dollar gains.

EUR

The euro got hit by a wave of mixed data, as Germany showed a strong employment figure while inflation reports fell short of expectations. The German preliminary CPI marked a 0.3% decline while Spain’s flash CPI showed a 0.1% dip, reminding traders of the possibility of deflation in the euro region. The unemployment change figure came in at -22K for Germany while Spanish GDP came in line with consensus at 0.5%. For today, German and French retail sales reports are due, along with the region-wide CPI estimates. Weak data could once again spark euro weakness.

GBP

The pound bounced back in yesterday’s trading sessions even though there were no major releases from the UK economy. Nationwide HPI marked a 0.5% gain in house prices as expected. There are no reports up for release from the UK economy today, suggesting that consolidation might be seen for pound pairs or profit-taking might drive price action.

CHF

The franc was able to recover to the dollar, thanks to upbeat data from Switzerland. The KOF economic barometer showed a higher than expected reading of 99.8, up from an upgraded 99.3 figure and outpacing the 99.2 consensus. The UBS consumption indicator improved to 1.46, although the previous figure was downgraded to 1.28. There are no major reports due from Switzerland today as the franc might take its cue from euro zone data once more.

JPY

The yen continued to give up ground to its forex counterparts, as traders kept pricing in the possibility of further BOJ easing. Earlier today, Japan’s reports came in mostly in line with expectations, with the exception of the household spending report. This showed a 5.6% decline, worse than the estimated -4.0% figure and the previous -4.7% reading. Tokyo core CPI and the national core CPI both posted weaker readings compared to the previous period, confirming BOJ Governor Kuroda’s weak inflation concerns. The BOJ statement could further spark volatility for yen pairs today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls got back on their feet yesterday, after selling off during the FOMC statement the other day. New Zealand showed a 12.2% decline in building consents while Australian producer prices marked a 0.2% gain as expected. Canadian GDP is up for release later and a flat figure is eyed, which might lead to weakness for the Loonie if the actual figure comes in weak.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 3, 2014)

USD

The US dollar continued its ascent until the very end of the week, particularly against the euro and the yen. Data from the US economy was mixed, with the personal spending and income figures coming short of expectations and the employment cost index and Chicago PMI beating expectations. For today, the ISM manufacturing PMI is due and it might show a dip from 56.6 to 56.5, reflecting a slightly slower pace of expansion in the industry. Strong data could add another boost for the dollar though, as it might set the tone for a strong NFP release later in the week.

EUR

The euro gave up ground to the dollar but was able to take advantage of yen weakness at the end of the week. Data from the euro zone was much weaker than expected, with Germany printing a 3.2% decline in retail sales and France marking a 0.8% drop in consumer spending. The headline CPI flash estimate for the region showed a 0.4% uptick as expected while the core CPI flash estimate fell short of estimates and posted a 0.7% gain. Spanish and Italian manufacturing PMI are up for release today and weak figures could inspire more losses for the shared currency.

GBP

The pound consolidated to the dollar and rallied to the yen on Friday, as there were no major reports released from the UK. For today, only the manufacturing PMI is up for release but this might spark a strong reaction from the currency. The reading is slated to drop from 51.6 to 51.5, reflecting a slower pace of industry expansion. However, a stronger than expected reading might lead to a bounce for the pound.

CHF

The franc simply followed the euro’s footsteps on Friday since there were no reports from Switzerland to give it direction. Unfortunately for the Swiss currency, data from the euro region came in weaker than expected and revived fears of deflation and a recession. Swiss SVME PMI is up for release today and it might show an improvement from 50.4 to 51.3, which would mean that the manufacturing industry saw a stronger expansion.

JPY

The yen gave up a lot of ground on Friday when the BOJ surprised the markets with its decision to ramp up its easing efforts. The central bank decided to expand its monetary base with higher asset purchases in order to ward off the threat of deflation in the country. BOJ Governor Kuroda also mentioned that they are gearing up for another sales tax hike, which might hurt spending and manufacturing again. Japanese banks are on holiday today, which means that there are no reports lined up, but the yen might lose further ground after this easing decision.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of yen weakness but were no match to the dollar’s strength on Friday. Canadian GDP was weaker than expected at -0.1% while Australia’s building approvals report released today showed a massive 11.0% decline. ANZ job advertisements marked a mere 0.2% uptick, setting the tone for a potential disappointment in Australia’s jobs report due later this week. Chinese non-manufacturing PMI dipped from 54.0 to 53.8, reflecting a slight slowdown in the services industry.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (Nov 4, 2014)

USD

The US dollar was on a roll once more, as the currency continued to advance against most of its forex counterparts. EURUSD tested new lows while USDJPY went on to rally to levels not seen since 2007. Data from the US was stronger than expected, as the ISM manufacturing PMI improved from 56.6 to 59.0, reflecting stronger industry expansion. There are no major reports up for release from the US economy today, with only the medium-tier factory orders data lined up, paving the way for potential short-term corrections among dollar pairs.

EUR

The euro continued to fall against the dollar but managed to edge higher against the yen, as data from the euro region came in mostly weaker than expected. The Spanish manufacturing PMI held steady at 52.6 while the Italian manufacturing PMI fell from 50.7 to indicate industry contraction at 49.0. Spanish unemployment change data is due today, along with EU economic forecasts. Joblessness in Spain could increase by 23.4K while more downgrades are expected from the EU, which might drive the euro much lower against its counterparts.

GBP

The pound managed to consolidate to the dollar yesterday, as data from the UK was stronger than expected. The manufacturing PMI improved from 51.5 to 53.2 to indicate a stronger pace of expansion in the industry. Construction PMI is up for release today and a decline from 64.2 to 63.5 is eyed, although this report doesn’t have a very strong impact on pound pairs. Do watch out for potential misses though, as it could lead to a GBPUSD breakdown.

CHF

The franc made a bit of progress in filling its weekend gap to the dollar, thanks to stronger than expected SVME PMI. The index jumped from 50.4 to 55.3, indicating a strong pickup in the manufacturing industry. There are no reports due from Switzerland today, leaving the currency following in the euro’s footsteps or sensitive to market sentiment.

JPY

The yen was still in a weak spot yesterday, as the Japanese currency opened lower to most of its counterparts and yen pairs haven’t been able to fill in the gaps. Japanese banks were on holiday yesterday so there were no reports released while today had the manufacturing PMI, which declined from 52.8 to 52.4, reflecting weaker expansion in the industry. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground to the dollar, after Australia’s building approvals showed a massive 11.0% decline and the ANZ job advertisements showed a weak gain. Earlier today, Australia reported a stronger than expected 1.2% increase in retail sales but its trade balance was weaker than expected. To top it off, the previous figure was downgraded to show a wider deficit. The RBA didn’t make any rate changes in their policy statement though, still emphasizing that the Aussie is high by historical standards. The New Zealand dairy auction is scheduled today while Canada has its trade balance due later, along with a speech from BOC Governor Poloz.

By Kate Curtis from Trader's Way