Daily Market Outlook by Kate Curtis from Trader's Way

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568

USD

The US dollar was off to a slow start in the week but soon regained ground as risk aversion set in. US equities were able to recover from their Friday slump, adding further support for the US currency. Data was weaker than expected, as the Empire State manufacturing index rose from -11.4 to -10.7 only, short of the projected -5.3 figure. US CPI readings are due today, with both the headline and core figures slated to post 0.2% upticks. Also due are reports on industrial production and capacity utilization.

EUR

The euro broke to fresh lows against the US dollar in the wake of the terrorist attacks in Paris. Policymakers have said that it’s too early to quantify the losses and speculate if it will impact monetary policy. Data from the euro zone was stronger than expected though, with the headline CPI revised from 0.0% to 0.1% and the core CPI upgraded from 1.0% to 1.1%. German ZEW data is due today and a rise from 1.9 to 6.7 is eyed.

GBP

The pound managed to put up a strong fight against its forex peers, as traders appear to have positive expectations ahead of the UK CPI release. Analysts expect to see another 0.1% decline in headline CPI and a steady core CPI at 1.0%, with stronger than expected data likely to renew calls for BOE tightening and give the pound a boost.

CHF

The franc followed in the euro’s footsteps since there were no reports out of the Swiss economy. There are still no reports due from Switzerland today, which suggests that the franc could keep tracking the euro that is sliding against its peers.

JPY

The yen was unable to take advantage of the run in risk aversion as Japan’s latest GDP report showed a contraction and confirmed that the country is back in recession. There are no reports due from Japan today, which suggests that yen traders might stay hesitant to pile on their long positions.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were tossed around by risk sentiment, with the Loonie managing a bit of recovery during the late US session on speculations of lower oil output due to the US airstrikes in ISIS-controlled oil fields near Syria. Data from Canada was actually weaker than expected, with manufacturing sales slumping 1.5% and foreign securities purchases also posting a decline. RBA minutes and New Zealand quarterly inflation expectations data are up next.

By Kate Curtis from Trader’s Way

569

USD

The US dollar was directionless in recent trading sessions, as mixed reports and the looming release of the FOMC minutes prevented traders from taking on large positions. US headline CPI showed a 0.2% gain as expected while the core version of the report also printed a 0.2% increase. Industrial production dropped by 0.2% in October against expectations of a 0.1% rise while capacity utilization eased to 77.5%. Dollar pairs could be in for consolidation ahead of the FOMC minutes and additional volatility is expected during its actual release.

EUR

The euro slid lower against its peers once more, as news reports revealed that another potential terror attack in Germany was foiled. Police are saying that a van full of explosives was found outside a soccer stadium where a match between Germany and Netherlands was to be held. The event was cancelled, keeping traders on edge with all the uncertainty in the region. Data from the euro zone was mixed, as the German ZEW index rose from 1.9 to 10.4 while the region’s index fell from 30.1 to 28.3.

GBP

The pound managed to outperform its rivals when CPI readings came in line with expectations. The October CPI reading showed a 0.1% drop as expected but the core CPI climbed to 1.1% instead of holding steady at 1.0%. There are no reports due from the UK economy today.

CHF

The franc moved up to its highs following the SNB’s decision to scrap the franc peg earlier this year. There were no reports out of the Swiss economy but the rising likelihood of further ECB easing put traders on intervention watch. Swiss ZEW economic expectations data is due today and an improvement from the previous 18.3 reading could allow the currency to stay afloat.

JPY

The yen managed to score some gains against its rivals as risk aversion extended its stay, but traders appear hesitant to buy the Japanese currency due to the country’s recession and the upcoming BOJ statement. There were no reports out of Japan yesterday and none are due today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie drew support from the RBA minutes, which confirmed that the central bank is less dovish these days. Meanwhile the Loonie was able to stay supported by rising oil prices, as traders price in a drop in production and supply due to the tension in Syria. On the other hand, the Kiwi was in a weak spot after the GDT auction showed a 7.9% fall in dairy prices, signaling that the industry slowdown isn’t over. Australian quarterly wage index and New Zealand’s PPI numbers are up for release next.

By Kate Curtis from Trader’s Way

570

USD

The FOMC minutes confirmed the likelihood of a Fed rate hike in December but the dollar barely advanced after the release, as expectations have been priced in for quite some time already. The transcript showed that most policymakers agreed that the US economy can achieve the conditions necessary to warrant a rate hike next month but cautioned that the next tightening moves would be gradual. For today, initial jobless claims and the Philly Fed index are up for release.

EUR

The euro managed to make a bit of a bounce to the dollar, as traders probably booked profits off key levels. There were no reports from the region yesterday, leaving the shared currency under pressure by ongoing uncertainty in France. The euro zone current account balance and ECB monetary policy meeting accounts are due next.

GBP

The pound continued to move sideways, as there were no major reports out of the UK. Today has the retail sales figure on tap and a 0.4% decline is expected for October, following the previous 1.9% jump. Positive or stronger than expected data could allow the pound to break higher or resume its climb against its forex peers.

CHF

The franc barely made any headway in either direction, as traders are probably waiting for more catalysts. Swiss ZEW economic expectations dropped from 18.3 to 0.0, reflecting a downturn in optimism. Today has the Swiss trade balance due and a larger surplus of 3.18 billion CHF from the earlier 3.05 billion CHF is eyed.

JPY

The yen made small gains in yesterday’s sessions, with risk aversion in play. Traders are taking it easy with their yen positions ahead of the BOJ interest rate statement today, as the central bank might shift to a dovish stance now that the country’s GDP indicated a return to recession. Any easing announcements could spur huge losses for the Japanese currency, particularly against the dollar which is eyeing a likely Fed rate hike in December.

Commodity Currencies (AUD, NZD, CAD)

The Loonie continued to rake in more gains as oil prices staged another strong bounce. In New Zealand, PPI readings beat expectations, with input prices up 1.6% versus the projected 0.1% uptick and output prices up 1.3%. There are no other reports due from the comdoll economies for the rest of the day, keeping market sentiment and commodity price movements in control of price action.

By Kate Curtis from Trader’s Way

571

USD

The US dollar continued to give up ground to its peers even though the FOMC minutes pretty much sealed the deal for a December liftoff. Profit-taking appears to be in play, as most of these rate hike expectations have been priced in for quite some time. Data from the US economy was actually better than expected, with initial jobless claims at 271K versus the 272K forecast and the Philly Fed index improving from -4.5 to +1.7 to indicate industry expansion.

EUR

The euro recovered against most of its forex rivals when the euro zone current account balance came in better than expected. The bounce was also partly spurred by reports that the French police was able to capture the perpetrators of last week’s terror attacks. German PPI and a speech by ECB Governor Draghi are lined up for today.

GBP

The pound showed some weakness in recent trading sessions when the UK retail sales data turned out to be a disappointment. The report showed a 0.6% decline worse than the estimated 0.4% drop while the previous report was downgraded to show a 1.7% increase. Public sector net borrowing data is up for release today.

CHF

The franc also bounced back against its rivals, following in the euro’s footsteps. The Swiss trade balance came in better than expected, showing a surplus of 4.16 billion CHF compared to the projected 3.18 billion CHF figure. There are no reports due from the Swiss economy today.

JPY

The yen made a strong comeback in the forex charts when the BOJ refrained from boosting its current stimulus program. Analysts had expected some form of dovishness, especially since the Japanese economy is back in recession and the latest trade balance showed a surprise decline in exports. Still, the BOJ maintained that the Japanese economy continued to recover moderately and that it can achieve its inflation target of 2% by the second half of 2016. No reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a strong rebound towards the end of the trading day when the US natural gas storage report showed falling supply levels. This follows the crude oil inventories report which also showed a decline in stockpiles, easing fears of a supply glut and putting upward pressure on prices. Canadian CPI and retail sales figures are up for release today.

By Kate Curtis from Trader’s Way

572

USD

The US dollar rebounded against its forex rivals on Friday, recovering back to its weekly highs against most of its counterparts. There were no major reports out of the US then but FOMC members Dudley and Williams reaffirmed the idea of a December Fed rate hike. The Fed has an unscheduled announcement later today that might spur volatility among dollar pairs.

EUR

The euro resumed its spot in the last place in the currency race, as the shared currency gave up a lot of ground on Friday. German PPI data came in weaker than expected with a 0.4% decline versus the projected 0.2% drop while ECB Governor Draghi reiterated in his testimony that the central bank will do what it takes to boost inflation. Euro zone PMI readings are up for release today.

GBP

The pound was also in a weak spot on Friday, thanks to worse than expected public sector net borrowing data. The report showed a 7.5 billion GBP deficit versus the projected 5.5 billion GBP shortfall. There are no reports due from the UK economy today.

CHF

The franc also gave up ground against its peers, as the euro showed more signs of weakness. There have been no reports out of the Swiss economy then and none are due today, which suggests that the Swissy might keep taking its cue from the euro.

JPY

The yen enjoyed the return in risk aversion on Friday, even though there were no reports out of Japan. Banks are closed for the holiday today which means that there are no major catalysts on deck and that liquidity might be lower in Asia.

Commodity Currencies (AUD, NZD, CAD)

The Aussie carried on with its strong rallies, followed by the Kiwi and leaving the Loonie to eat dust. Canadian headline CPI came in line with expectations of a 0.1% uptick while the core CPI showed a stronger than expected 0.3% gain. Headline and core retail sales slipped 0.5%, worse than the projected declines. Over the weekend, New Zealand reported a meager 0.2% uptick in visitor arrivals for October.

By Kate Curtis from Trader’s Way

573

USD

The US dollar still managed to dominate against its forex peers even with weaker than expected economic data. The flash manufacturing PMI for November showed a decline from 54.1 to 52.6, reflecting a slower pace of growth. Existing home sales fell from 5.55 million in September to 5.36 million in October. For today, the CB consumer confidence index is due and a rise from 97.6 to 99.3 is eyed. Aside from that, the preliminary GDP reading is up for release and any revisions could be crucial to dollar price action.

EUR

The euro resumed its tumble at the start of the week, dipping below the 1.0600 mark against the dollar. Data from the euro zone was actually mostly stronger than expected, with only the French flash services PMI falling short. The German Ifo business climate index is due today and a small rise from 108.2 to 108.3 is expected, indicating a small improvement in confidence.

GBP

The pound sold off against most of its forex counterparts, even though there were no major reports out of the UK. The BOE inflation report hearings are scheduled today and more downbeat comments are expected, especially since the latest policy statement and minutes sounded less upbeat. UK CBI realized sales data is also due today.

CHF

The franc managed to hold its ground yesterday even with the euro resuming its tumble. There have been no reports out of Switzerland and today has the employment level on tap. Any signs of improvement could spur gains for the franc while a reduction could lead to losses.

JPY

The yen was able to outpace its forex rivals, including the US dollar, even though Japanese traders were out on a holiday yesterday. The flash manufacturing PMI is due today and a dip from 52.4 to 52.1 is expected, reflecting a weaker pace of industry expansion.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent wins since there were no major reports to allow the rallies to carry on. The Loonie got a bit of a boost from speculations that the OPEC might finally announce a reduction in oil supply during their meeting next week. RBA Governor Stevens has a testimony lined up today.

By Kate Curtis from Trader’s Way

574

EURGBP appears to have made yet another bounce off the bottom of its long-term range. Price tested the .7000 major psychological level recently and is staring to make its way higher.

Stochastic is starting to head back up from the oversold area, indicating a return in bullish momentum. Similarly, RSI is also climbing out of the oversold region to show that buyers are regaining control.

The 100 SMA is below the 200 SMA for now but an upward crossover seems imminent. The moving averages are edging closer together and a crossover could add confirmation that a rally is in the cards.

Earlier this week, the BOE Inflation Report hearings were held, highlighting the shift of a less upbeat tone for the UK central bank. This echoes their less hawkish sentiment shared during the BOE statement and minutes, indicating that policymakers are inclined to keep rates low for much longer.

Meanwhile, the euro is recovering against most of its forex peers, following the terror attacks in Paris and the dovish ECB statement. On Monday, PMI readings from Germany and France came in mostly stronger than expected.

The only major events lined up from the euro zone are the Spanish flash CPI and French consumer spending data due on Friday. Meanwhile, the UK is set to print its second estimate GDP reading for Q3 and probably show no change from the initial 0.5% estimate.

By Kate Curtis from Trader’s Way

575

USD

The US dollar functioned mostly as a counter currency in recent trading sessions, ending up with a mixed performance against its forex peers. Data from the US economy came in weaker than expected, as the CB consumer confidence index slumped from 99.1 to 90.4 in November and the Richmond manufacturing index indicated a drop from -1 to -3. For today, durable goods orders, initial jobless claims, and personal spending and income data are all lined up.

EUR

The euro managed to stay afloat against the dollar and recover against the pound, as traders probably booked profits off their recent short positions. Data from the euro zone has surprised to the upside once more, with the German Ifo business climate index rising from 108.2 to 109.0. Only the Italian retail sales report is due today and this might not have a huge impact on the shared currency’s movement.

GBP

The pound was in a very weak spot after the BOE Inflation Report hearings revealed a downbeat tone. According to Governor Carney, rates will remain low for quite some time, a different view from what he expressed in the past. The UK second estimate GDP reading is due today and no revisions from the initial 0.5% estimate are eyed.

CHF

The franc took its cue from the euro and regained a bit of lost ground. There were no major reports due from Switzerland then while today has the UBS consumption indicator on deck. Any improvement from the earlier 1.65 reading could spur more gains for the Swiss currency.

JPY

The yen gave up some ground against its peers, except for the US dollar and the British pound. Japan’s flash manufacturing PMI for November beat expectations and climbed from 52.4 to 52.8 instead of falling to 52.1. For today, the BOJ monetary policy meeting minutes are due.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to rally against their rivals, with the Aussie leading the pack. There were no reports released out of Australia but RBA Governor Stevens’ speech seemed to highlight the central bank’s shift to a less dovish stance. Australia’s quarterly construction work done report is up for release next.

By Kate Curtis from Trader’s Way

576

USD

The US dollar chalked up another mixed forex performance, as economic reports were all over the place. The headline durable goods orders report showed an impressive 3.0% gain while the core version of the report simply came in line with expectations of a 0.5% uptick. Initial jobless claims also came in above expectations but the core PCE price index disappointed with a flat reading. Personal spending rose 0.1% even as personal income grew by 0.4%. US traders will be off on their Thanksgiving holiday today so some profit-taking might be seen.

EUR

The euro continued to sell off against its peers when a Reuters interview with a couple of ECB officials was published. According to them, a number of policy options have been discussed, strengthening the case for additional easing in the ECB’s December statement. Data from the euro zone was weaker than expected as the Italian retail sales report printed a 0.1% drop instead of the estimated 0.5% increase.

GBP

The pound was still in a weak spot since there were no major reports to give it any support. The Treasury’s autumn forecast statement did contain some positive bits, as the growth estimate for 2016 was upgraded. There are no reports lined up from the UK today.

CHF

The franc saw another set of losses against its forex peers even though there were no major reports out of Switzerland. Franc bears got in the game upon hearing reports that the ECB is likely to announce further easing in December, speculating that the SNB might intervene in the currency market to keep the franc weak. The Swiss UBS consumption indicator actually improved from 1.56 to 1.60 and there are no reports due from the Swiss economy today.

JPY

The yen gave up some ground to the dollar and a few of its forex rivals as risk aversion appeared to ease in the financial markets. There were no major reports out of Japan then and none are due today, allowing traders to price in expectations ahead of the spending and inflation reports due later on.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the stronger ones in the bunch, as the Canadian currency continued to draw support from oil prices. Australia printed a weaker than expected quarterly construction work done report while New Zealand showed a smaller trade deficit for October, although this was spurred by a decline in both imports and exports. Australia is set to print its private capital expenditure report next.

By Kate Curtis from Trader’s Way

577

USD

The US dollar was mostly stuck in consolidation against its forex rivals since there were no reports out of the US economy. Traders are off on Thanksgiving holidays and might not be back until Monday’s US trading session. There have been no reports out of the US yesterday and none are due today.

EUR

The euro resumed its slide since the lack of top-tier data allowed traders to keep speculating on what the ECB might do next. A report from Reuters showed that ECB officials discussed the policy options they could employ but no details have been confirmed yet. French consumer spending and Spanish flash CPI are up for release next.

GBP

The pound was also in a weak spot even though there were no reports out of the UK. Traders appear to be pricing in expectations ahead of the UK second GDP release today, although no major revisions to the initial 0.5% estimate are expected. Any downgrades could mean sharp losses for the pound since this would underscore the BOE’s less hawkish stance.

CHF

The franc gave up some ground in recent trading, as the prospect of further ECB easing could mean additional SNB intervention. There were no reports out of the Swiss economy yesterday and none are due today, keeping risk sentiment in play.

JPY

The yen advanced against most of its peers as risk aversion popped its head back in the markets. Traders are waiting for the release of Japan’s household spending and inflation readings today, with small declines expected. Still, the lack of dovishness from the BOJ could keep the yen supported even with downbeat data.

Commodity Currencies (AUD, NZD, CAD)

Commodities retreated in recent trading sessions, dragging the comdolls down in the process. In Australia, the private capital expenditure report showed a 9.2% drop in Q3, worse than the projected 2.8% drop. There are no major reports due from the comdoll economies today so commodities could push prices around.

By Kate Curtis from Trader’s Way

578

NZDUSD has been on a selloff but it looks like a reversal may be in order. Price is forming an inverse head and shoulders pattern on its 4-hour time frame, with an upside break of the neckline at the .6600 handle likely to send the pair up by 200 pips or the same height as the formation.

Technical indicators, however, are suggesting that the downtrend could still carry on. The 100 SMA is far below the 200 SMA and is showing no signs of making an upward crossover, which means that the path of least resistance is to the downside.

Meanwhile, stochastic and RSI are in the oversold regions so sellers might take control. In that case, NZDUSD could resume its drop to the .6400 major psychological support or much lower.

Event risks for this setup include the New Zealand Global Dairy Trade auction midweek, which might yield another decline in dairy prices. In addition, a bunch of top-tier reports are lined up in Australia and these might also influence Kiwi price action.

As for the US dollar, the non-farm payrolls release is due on Friday and another upbeat jobs reading could seal the deal for a Fed rate hike in their December meeting. For the month of November, a 201K increase in hiring is expected, slower than the previous 271K gain.

By Kate Curtis from Trader’s Way

579

USD

The lack of top-tier data from the US and the low liquidity after Thanksgiving wasn’t enough to stop the US dollar from rallying against its peers, as risk aversion seemed to take over the financial markets. Only the Chicago PMI and pending home sales data are up for release today, which suggests a potentially quiet trading day ahead.

EUR

The euro resumed its slide to the dollar, as most reports from the region missed expectations. German import prices fell 0.3% versus the projected 0.1% decline while French consumer spending decreased 0.7% instead of posting the estimated 0.2% uptick. The Spanish flash CPI was slightly better than expected at -0.3% versus the projected -0.5% reading. German retail sales and CPI are due today, with analysts expecting a 0.3% increase in consumer spending and a 0.1% rise in price levels.

GBP

The pound managed to hold its ground on Friday, thanks to upbeat data from the UK. The second GDP estimate didn’t see any revisions from the initial 0.5% growth estimate but the preliminary business investment report showed a 2.2% jump versus the projected 1.5% increase in Q3. Net lending to individuals and mortgage approvals data are due today.

CHF

The franc suffered a sharp selloff against its counterparts on SNB intervention speculations. There were no actual reports released from Switzerland then while today has the KOF economic barometer. A rise from 99.8 to 100.3 is expected, possibly giving the franc some room to recover.

JPY

The yen took advantage of the run in risk aversion, but it was still no match to dollar strength. Data from Japan came in mixed, as household spending sank by 2.4% while the jobless rate dropped from 3.4% to 3.1%. Price levels in Tokyo stayed flat instead of falling by the estimated 0.1% figure while the national core CPI showed another 0.1% drop. Earlier today, the Japanese retail sales report showed a 1.8% gain while the industrial production reading missed expectations and showed a 1.4% increase.

Commodity Currencies (AUD, NZD, CAD)

The comdolls suffered a bit of a selloff on Friday, following the lead of gold and oil prices. Gold fell to its six-year low below the $1,100/ounce level while WTI crude oil slipped back below $42/barrel. In New Zealand, building consents rebounded by 5.1% while the ANZ business confidence index improved from 10.5 to 14.6.

By Kate Curtis from Trader’s Way

580

USD

The US dollar made a few wins and losses here and there, as the currency seemed to react to country-specific events. Data from the US economy came in weaker than expected, with both the Chicago PMI and pending home sales report falling short of consensus. Up ahead, the US ISM manufacturing PMI is up for release and a climb from 50.1 to 50.6 is eyed. Traders are also likely to pay close attention to the employment sub-index for more clues on the upcoming NFP.

EUR

The euro resumed its slide to its peers, as data from the euro zone turned out to be a disappointment again. German retail sales slumped 0.4% while the Italian preliminary CPI posted a larger than expected 0.4% drop. The German unemployment change report and Spanish manufacturing PMI numbers are up for release today and another round of downbeat figures could mean more losses for the shared currency.

GBP

The pound managed to hold its ground against most of its rivals, as medium-tier UK data came in mostly in line with expectations. Top-tier events such as the release of bank stress test results and the BOE Financial Stability Report could have a larger impact on pound price action today.

CHF

The franc managed to erase some of its losses even though Swiss data came in weaker than expected. The KOF economic barometer slid from 100.4 to 97.9, worse than the estimated dip to 100.3. The Swiss Q3 GDP report is due today and another 0.2% expansion is eyed.

JPY

The yen lost a lot of ground to its peers as reports from Japan came in mixed and BOJ Governor Kuroda insisted that additional stimulus isn’t necessary. Japanese retail sales rose 1.8% while the preliminary industrial production report printed a lower than expected 1.4% gain. Capital spending data and the final manufacturing PMI for November are due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a lot of headway against their forex rivals, as traders appear to be pricing positive expectations for this week’s top-tier events such as the OPEC meeting, Chinese PMI releases, and the New Zealand dairy auction. The ANZ business confidence index in New Zealand improved from 10.5 to 14.6 while Canada saw a smaller current account deficit. Some improvements are expected for the Chinese PMI readings and another upbeat statement is expected from the RBA next.

By Kate Curtis from Trader’s Way

581

USD

The US dollar had a rough trading day, as the downbeat ISM manufacturing PMI forced the currency to retreat. The reading slipped from 50.1 to 48.6 in November, its lowest reading since June 2009, instead of rising to the projected 50.6 figure. Up ahead, the ADP non-farm employent change is due and a 191K increase in hiring is eyed. Also lined up today is a testimony by Fed Chairperson Janet Yellen.

EUR

The euro managed to take advantage of dollar weakness and join the risk rallies when data from its top economies turned out strong. German showed a larger than expected decline in joblessness of 13K while Spain and Italy printed stronger than expected manufacturing PMI numbers. Euro zone CPI estimates are due next and positive readings could allow the shared currency to hold on to its gains.

GBP

The pound was mostly flat against the dollar and the yen but was no match to comdoll strength. The UK manufacturing PMI came in below expectations at 52.7 from the previous 55.2 figure. The construction PMI is up for release next and a drop from 58.8 to 58.4 is eyed.

CHF

Data from Switzerland came in below expectations, yet the franc also managed to regain ground to the dollar. Retail sales slipped 0.8% instead of posting the projected 0.4% uptick while the manufacturing PMI fell from 50.7 to 49.7 to indicate industry contraction. There are no reports due from the Swiss economy today.

JPY

The yen was also significantly weaker in recent sessions due to the run in risk appetite, but it managed to advance against the dollar. There were no major reports out of Japan then and none are due today, which suggests that the currency could stay sensitive to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were the biggest winners for the day, lifted by upbeat rhetoric from the RBA and the pickup in dairy prices during the latest GDT auction. The Loonie fell behind as Canada’s monthly GDP printed a 0.5% contraction instead of the projected 0.1% uptick in growth. Up ahead, the Australian quarterly GDP is due, followed by the BOC interest rate statement later on.

By Kate Curtis from Trader’s Way

582

USD

The US dollar continued to give up ground during the earlier trading sessions but made a bit of a recovery later on. Data from the US economy was mostly stronger than expected, as the ADP non-farm employment change report indicated a 217K gain versus the projected 191K rise. This sets the tone for a positive NFP release later on, reminding traders that the Fed is on track to hike rates in their December meeting. The ISM non-manufacturing PMI is due next and a drop from 59.1 to 58.1 is eyed.

EUR

The euro made a strong bounce against the dollar but weakened against its other rivals when data from the euro zone came in mixed. The flash CPI readings showed small gains but were lower than expected while the Spanish unemployment change report showed a larger decline in joblessness. The ECB monetary policy statement is lined up next and expectations for additional stimulus are running high.

GBP

The pound suffered more weakness to most of its currency rivals, as the UK construction PMI came in weaker than expected. The reading fell from 58.8 to 55.3 in November, reflecting slower industry expansion. For today, the services PMI is due and a rise from 54.9 to 55.1 is expected but another disappointment might mean more pound weakness.

CHF

The franc surprisingly made a strong rally to the dollar even though there were no major reports out of Switzerland. There are still no reports due from the Swiss economy today, leaving the franc to take its cue from euro events like the ECB statement.

JPY

The yen managed to regain a bit of lost ground, as traders probably booked profits off key levels. There have been no major reports out of Japan yesterday and none are due today, leaving risk sentiment in the driver’s seat of price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to rally although signs of exhaustion were seen. Australia’s GDP beat expectations with a 0.9% expansion versus the projected 0.7% growth figure for Q3 while the previous reading was upgraded from 0.2% to 0.3%. Australia’s trade balance is up next and a wider deficit is eyed. Meanwhile, the BOC decided to keep interest rates unchanged at 0.50% as expected while crude oil inventories in the US rose from 1M to 1.2M barrels.

By Kate Curtis from Trader’s Way

583

USD

The US dollar had a late rally during the New York trading session as Fed Chairperson Yellen reiterated her hawkish bias. Data from the US economy fell below expectations, as the ISM non-manufacturing PMI dropped from 59.1 to 55.9 instead of just dipping to 58.1. Still, analysts are expecting to see an upbeat NFP reading due to the pickup in employment indices and the stronger than expected ADP report.

EUR

The euro staged a strong climb following the ECB interest rate statement even though the central bank announced additional stimulus measures. Policymakers lowered the deposit rate to -0.30% and announced an extension of their QE program, bringing the total up to 1.5 trillion EUR. Still, market watchers were disappointed that the actual size of monthly purchases were maintained. German factory orders data is due next and a 1.3% rebound is eyed.

GBP

The pound also made a strong climb in recent trading sessions, thanks to stronger than expected UK services PMI. Traders had been bracing themselves for another disappointment, as the manufacturing and construction sectors failed to meet expectations. The actual figure rose from 54.9 to 55.9, outpacing the consensus at 55.1. Only the Halifax HPI is due today.

CHF

The franc enjoyed a bit of a relief rally when the ECB refrained from easing too much. This lowered the odds of SNB intervention, allowing traders to lighten up on their short franc positions. There were no reports out of the Swiss economy then and the CPI report is due today, with a flat reading expected.

JPY

The yen was all over the place as it mostly reacted to risk sentiment and currency-specific events. There were no reports out of Japan yesterday while today has the average cash earnings index lined up. A pickup in wages of around 0.4% would be in line with expectations, possibly keeping the yen afloat. Japanese consumer confidence data is also up for release.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were slightly weaker against the dollar and returned their wins to the European currencies, as Australia printed a downbeat trade balance. The deficit widened to 3.31 billion AUD because of a sharp 3% drop in exports. Retail sales data is up next and a 0.4% uptick is expected. In Canada, the trade balance and jobs figures are up for release.

By Kate Curtis from Trader’s Way

584

USD

The US dollar managed to make a quick rebound on Friday, thanks to upbeat jobs data. The US economy added 211K jobs in November, higher than the projected 201K gain. Meanwhile, the previous report enjoyed an upgrade from 271K to 298K and the unemployment rate held steady at 5.0%. Average hourly earnings rose 0.2% as expected. Only the labor market conditions index is due today.

EUR

The euro returned some of its recent wins at the end of the week but remained around its current trading levels against some of its peers. Data from the euro zone came in stronger than expected then, as German factory orders rose 1.8% versus the projected 1.3% increase. For today, the German industrial production report and euro zone Sentix investor confidence index is due.

GBP

The pound struggled to hold its ground on Friday since there were no major reports to give it any support. A testimony by BOE Governor Carney is lined up today and this should set the tone for the BOE interest rate statement later on in the week. Dovish remarks could spur losses for the pound while reassuring comments could help it stay afloat.

CHF

The franc gave back some of its wins at the end of the week, possibly due to profit-taking. The Swiss CPI actually missed expectations and showed a 0.1% drop instead of posting a flat reading. Swiss foreign currency reserves data are due today and a significant gain could be indicative of SNB intervention.

JPY

The yen lost ground on risk appetite last Friday, as the upbeat jobs data from the US sparked demand for higher-yielding currencies. Data from Japan was actually better than expected, as the consumer confidence index rose from 41.5 to 42.6 while average cash earnings enjoyed a stronger than expected gain of 0.7%. Leading indicators and a speech by BOJ Governor Kuroda are lined up today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to keep rallying against the dollar on Friday, as risk appetite took hold of the financial markets. The OPEC refrained from cutting oil production and Canada printed a sharper than expected 35.7K drop in hiring, but the Loonie still moved sideways after the Ivey PMI jumped from 53.1 to 63.6. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader’s Way

585

[B]USD[/B]

The US dollar was able to recover at the start of the week, thanks to the downturn in commodity prices and the return in risk aversion. There were no major reports out of the US economy, as it seems that market participants are just bracing themselves for a rate hike next week.

[B]EUR[/B]

The euro returned some of its recent wins to the dollar as data from the region came in weak. Germany printed a 0.2% increase in industrial production, lower than the projected 0.8% gain, while the Sentix investor confidence index came up short of expectations. Only low-tier reports are due from the euro zone today.

[B]GBP[/B]

The pound struggled to hold on to its gains as investors appear to be pricing in more downbeat remarks from the BOE later on this week. There were no reports out of the UK yesterday while today has the Halifax HPI and manufacturing production lined up. Weak data could set the tone for a cautious BOE statement and MPC minutes on Thursday.

[B]CHF[/B]

The franc made its way back to the 1.0000 level against the dollar, but this area appears to be holding as support ahead of the SNB decision later this week. The Swiss central bank might announce intervention efforts or at least jawbone the currency since the ECB already ramped up their stimulus plan. The foreign currency reserves showed a bump up from 552B to 563B CHF.

[B]JPY[/B]

The yen took advantage of the run in risk aversion to recover against its forex rivals but it was still no match to dollar strength. Traders are waiting on the release of Japan’s current account balance and final GDP reading today, which might show a positive revision from -0.2% to +0.1%.

[B]Commodity Currencies (AUD, NZD, CAD)[/B]

The comdolls got slammed in today’s trading sessions, as WTI crude oil fell below $40/barrel and iron ore fell to record lows. There were no major reports out of the comdoll economies yesterday while today has the Australian NAB business confidence index and Chinese trade balance on tap. Canadian housing starts and building permits data are also due, along with a speech by BOC Governor Poloz.

[I]By Kate Curtis from Trader’s Way[/I]

586

USD

The US dollar was slightly weaker on the day, possibly due to the JOLTS job openings decline. The figure dropped from 5.53M to 5.38M instead of improving to the projected 5.59M reading. US crude oil inventories data is due today, but this could have a stronger impact on the Canadian dollar than the Greenback.

EUR

The euro enjoyed a return in bullish momentum following a day of consolidation after the ECB statement. Data from the region was actually weaker than expected, but it looks like traders are pricing in better economic performance later on since the ECB lowered deposit rates last week. Only the German trade balance is lined up today.

GBP

The pound was in a weak spot after the UK manufacturing production report showed a 0.4% decline, worse than the projected 0.1% drop. The Halifax HPI was also weaker than expected with a 0.1% drop instead of the expected 0.3% uptick.

CHF

The franc advanced against most of its peers, trailing the euro in today’s trading sessions. There were no reports out of Switzerland yesterday and only the unemployment rate is due today. This could show a steady reading of 3.4%, which might support the franc ahead of the SNB decision later on.

JPY

The yen was a big winner during the risk-off environment, as its lower-yielding US dollar rival was weighed down by downbeat jobs indicators. Medium-tier data from Japan, namely the current account balance and Economy Watchers sentiment index, were weaker than expected but the final GDP reading was upgraded from -0.1% to 0.3%. Japanese core machinery orders data is due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still on weak footing, with the Loonie losing ground the most. BOC Governor Poloz mentioned in his latest testimony that the central bank has more policy tools to use more than zero interest rates, such as negative deposit rates or asset purchases. This kind of forward guidance drove the Loonie much lower, as oil prices didn’t show any signs of bottoming out. Chinese CPI data is due and a rise from 1.3% to 1.4% is expected. The RBNZ decision is coming up and some are expecting a 0.25% cut.

By Kate Curtis from Trader’s Way

587

USD

The US dollar had a mixed performance, as it gave up ground to the yen, euro, pound and Kiwi but managed to stay strong against its other rivals. There have been no major reports out of the US, leaving risk sentiment as one of the major drivers of price action. Today has the initial jobless claims and import prices data on tap.

EUR

The euro continued to advance against the dollar but was slightly weaker against its other counterparts. Data from the euro zone was still better than expected, with Germany reporting a larger than expected trade surplus of 20.8 billion EUR versus the projected 19.2 billion EUR surplus. French jobs data, CPI, and industrial production numbers are on tap for today and another round of upbeat numbers could spur more euro rallies.

GBP

The pound managed to stay afloat when the UK FPC upgraded their forecasts for the economy. Up ahead, the BOE interest rate statement and MPC minutes are on the docket and this might trigger more volatility for pound pairs. The central bank sounded dovish in their previous statement and might reiterate their cautious outlook this time.

CHF

The franc continued to trail the euro and advance against some of its forex counterparts, as risk aversion stayed in play. The Swiss jobless rate held steady at 3.4% as expected, which suggests that the SNB might not sound to dovish in their upcoming statement. Still, any downbeat remarks or currency jawboning now that the ECB has eased policy might be in the works.

JPY

The yen was the biggest winner in the risk aversion game, as improving Japanese fundamentals led the currency to be the more preferred safe-haven. Japanese core machinery orders jumped by 10.7% instead of falling by 1.5%, setting the tone for stronger manufacturing conditions. Japan’s PPI is up for release today and a 3.8% decline is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took a break from their recent tumble when the US crude oil inventories report showed a drop in stockpiles, easing fears of an oversupply. The RBNZ decided to cut rates by 0.25% as expected but suggested that this might be the last of their rate cuts since they expect growth to pick up by next year. Australia’s jobs report is due next and a 10K drop in hiring is eyed.

By Kate Curtis from Trader’s Way