Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
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

588

USD

Data from the US economy came in mixed today, as the initial jobless claims report posted a downside surprise of 282K in claimants while import prices indicated a smaller than expected 0.4% drop versus the projected 0.8% decline. For today, the retail sales report is up for release and the headline figure is slated to show a 0.2% gain while the core figure could show a 0.3% increase.

EUR

The euro managed to resume its climb in recent trading sessions, even though data from the region came in mixed. French non-farm payrolls and CPI numbers fell short of expectations but the industrial production report surprised to the upside. More medium-tier reports such as German final CPI and Italian industrial production data are due next.

GBP

The pound managed to breathe a sigh of relief after the BOE maintained its cautious stance instead of shifting to a more dovish one. The central bank kept rates and asset purchases at their current levels while one policymaker still voted to hike rates. UK construction output and consumer inflation expectations are due next.

CHF

The franc was also able to regain ground after the SNB interest rate decision since the central bank refrained from lowering deposit rates or intervening in the forex market for now. Still, SNB head Jordan reiterated that the franc is significantly overvalued and that they have enough policy options left. There are no reports due from the Swiss economy today.

JPY

The yen gave up some ground in recent trading sessions as commodity prices recovered and risk appetite had a bit of a rebound. Data from Japan came in mixed, as the BSI manufacturing index fell short of expectations but the PPI improved from -3.8% to -3.6%. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie got a break from its tumble when Australia printed an incredibly strong jobs report. The economy added 71.4K jobs in November instead of posting the projected 10K in losses. However, the reliability of the report has been questioned for quite some time so the gains weren’t sustained. No other reports are due from the commodity currencies today.

By Kate Curtis from Trader’s Way

589

USD

The US dollar had a mixed performance, although it was generally weaker against most of its peers with traders lightening up on their long positions ahead of the FOMC statement later on. No reports were released from the US yesterday while today has the Empire State manufacturing index lined up. A climb from -10.7 to -5.7 is eyed, but a drop could spur more dollar weakness. Also due are the CPI readings for November.

EUR

The euro continued to move sideways against the lower-yielding currencies but gave up ground to the commodity currencies. Data from the euro zone was stronger than expected, with industrial production up by 0.6% versus the projected 0.3% gain. ZEW economic sentiment figures are lined up for today, with the German reading expected to rise from 10.4 to 15.2.

GBP

The pound was in a weak spot against its peers, as traders are pricing in expectations for a downbeat jobs report on Wednesday. The UK Rightmove HPI indicated a 1.1% fall in prices, following the previous 1.3% slump. UK CPI is due today and a 0.1% increase in the headline figure is expected.

CHF

The franc continued to advance against the dollar, even though there were no major reports out of the Swiss economy. Today has the PPI on tap and a 0.1% uptick in producer prices is eyed.

JPY

The yen gave up some of its recent gains when the Tankan survey results beat expectations and brought risk appetite back to the table. The manufacturing component held steady at 12 instead of falling to 11 while the non-manufacturing component also held steady at 25. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a strong start as commodity prices bounced back at the start of the week. There were no reports out of the comdoll economies while today has the RBA minutes on tap. Also coming up is Canada’s manufacturing sales data and New Zealand’s dairy auction.

By Kate Curtis from Trader’s Way

590

USD

The US dollar was able to bounce back against its peers when data came in mostly in line with expectations. The headline CPI stayed flat in November while the core version of the report showed a 0.2% uptick. The Empire State manufacturing index rose from -10.7 to -4.6, higher than the projected climb to -5.7 reading. For today, all eyes and ears are on the FOMC statement, as a rate hike might be accompanied by cautious remarks.

EUR

The euro was hit by a fresh round of selling pressure later in the day, even though the shared currency drew a bit of support from upbeat data. The German ZEW index rose from 10.4 to 16.1, higher than the estimated 15.2 reading, but the region’s figure fell short of expectations. Flash PMI readings from Germany and France are set to drive euro price action today.

GBP

The pound bounced upon seeing its CPI readings come in line with expectations but eventually gave up ground to its counterparts later on. The headline CPI showed a 0.1% uptick while the core CPI rose from 1.1% to 1.2%. The UK jobs report is up for release today and a 0.9K increase in claimants is eyed, enough to keep the unemployment rate steady at 5.3%, but the average earnings index is set to drop from 3.0% to 2.5%.

CHF

The franc also gave up ground in recent trading sessions even though the Swiss PPI beat expectations and showed a 0.4% gain. The Swiss ZEW expectations report is up for release today and any improvements from the previous 0.0 reading could keep the currency supported.

JPY

The yen took its cue from risk aversion since there were no reports out of Japan. Fortunately for the lower-yielding currency, risk-off flows were seen during the later sessions as traders probably liquidated their holdings ahead of the FOMC statement. The Japanese flash manufacturing PMI is still due before then and a rise from the previous 52.8 figure could mean more gains for the yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls caved to the dollar but managed to advance against the European currencies. New Zealand’s dairy auction showed a 1.9% rise in prices, slower than the previous 3.6% gain but still an increase nonetheless. Canada reported a worse than expected 1.1% slump in manufacturing sales but the Loonie was able to get a boost from BOC Governor Poloz’s reassuring speech. New Zealand’s Q3 GDP is up for release next.

By Kate Curtis from Trader’s Way

591

USD

The Fed increased rates by 0.25% as expected, upgrading growth and employment forecasts for 2016 as well. Although they downgraded their PCE inflation estimates for next year, Fed head Yellen still showed confidence in US fundamentals. In terms of data, industrial production, capacity utilization, and the flash manufacturing PMI all missed expectations. The Philly Fed index, initial jobless claims, and current account balance are up for release next.

EUR

Data from the euro zone came in mostly in line with expectations, as some figures even surprised to the upside. France printed a higher than expected manufacturing PMI but its services PMI missed the mark. Meanwhile the euro zone final CPI reading enjoyed an upgrade from 0.1% to 0.2%. The German Ifo business climate index is due today and a rise from 109.0 to 109.2 is eyed.

GBP

The pound was in a weak spot when the UK jobs report came in mostly weaker than expected. Even though the jobless rate dropped to new lows at 5.2%, claimants rose by 3.9K versus 0.9K while the average earnings index fell from 3.0% to 2.4% versus the projected 2.5% reading. Up ahead, the retail sales report is slated to show a 0.6% rebound.

CHF

The franc moved mostly sideways throughout the day as traders waited for the FOMC announcement. Data from Switzerland showed an improvement as the ZEW economic expectations index rose from 0.0 to 16.6. SECO economic forecasts are up for release today.

JPY

The yen continued to give up some of its recent wins when risk appetite returned to the markets. Japan’s flash manufacturing PMI dipped from 52.6 to 52.5, which still indicated an industry expansion. Japan’s trade balance is due today and the BOJ monetary policy statement is lined up for Friday.

Commodity Currencies (AUD, NZD, CAD)

The Loonie chalked up another round of losses when oil prices resumed their slide. US crude oil inventories rose by 4.6 million barrels instead of showing the estimated drop of 0.3 million barrels. Data from Canada was actually better than expected as foreign securities purchases picked up. New Zealand’s GDP came in at 0.9% for Q3, higher than the previous 0.4% growth figure.

By Kate Curtis from Trader’s Way

592

USD

The US dollar is on relatively strong footing this week, especially since the Fed recently started its rate hike cycle and data from the US came in mostly stronger than expected. The ISM manufacturing PMI is up for release today and a rise from 48.6 to 49.1 is eyed. Stronger than expected data could mean more gains for the dollar, especially if the jobs component indicates a gain.

EUR

The euro is struggling to stay afloat ahead of event risks this week, as another round of bleak data could spur expectations of additional ECB easing. For today, the German preliminary CPI and Spanish manufacturing PMI is lined up while tomorrow has the euro zone flash CPI estimates.

GBP

The pound suffered a sharp selloff at the start of this week’s trading, with traders likely pricing in downbeat reports from the UK. The manufacturing PMI is due today and a small rise from 52.7 to 52.8 is expected. Net lending to individuals and mortgage approvals data are also lined up.

CHF

The franc is coming off a very weak performance last week and has gapped lower against most of its peers at the start of Monday’s trading. Swiss manufacturing PMI is due today and a rise from 49.7 to 50.2 is eyed, likely providing a bit of support for the Swiss currency.

JPY

Data from Japan came in mixed over the past couple of weeks but the yen is currently being weighed down by the BOJ’s surprise decision to expand its ETF purchase program. The national core CPI printed a flat reading while household spending and retail sales indicated sharper than expected declines.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start this week when China printed a weaker than expected manufacturing PMI from Caixin. The government figures released last week indicated small improvements but traders appear to be placing more credibility on the non-official figures. Australian commodity prices are due next and the New Zealand GDT auction is scheduled tomorrow.

By Kate Curtis from Trader’s Way

593

USD

The US dollar was able to draw support from the run in risk aversion although it paled in comparison to the Japanese yen. The ISM manufacturing PMI turned out to be a disappointment as the reading fell from 48.6 to 48.2 instead of improving to the projected 49.1 figure. There are no major reports due from the US economy today.

EUR

The euro was able to pare its losses against its counterparts, except for the dollar and the yen, when data from the euro zone came in mostly stronger than expected. Although the German preliminary CPI came in below expectations with a 0.1% decline, the Italian manufacturing PMI surprised to the upside while other PMI readings from the top economies came in line with expectations. Euro zone CPI estimates and German unemployment change data are lined up.

GBP

The pound was in a weak spot yesterday after the UK printed a downbeat manufacturing PMI reading. The index fell from 52.5 to 51.9 instead of improving to the estimated 52.8 figure, reflecting a slower pace of expansion. The construction PMI is due today and a rise from 55.3 to 56.1 is expected but this might have a minimal impact on pound movement.

CHF

The franc managed to score some gains when the Swiss manufacturing PMI beat expectations. The reading rose from 49.7 to 52.1, outpacing the consensus at 50.2 to indicate a much stronger pace of industry expansion. There are no reports out of Switzerland today.

JPY

The yen was able to benefit from the downturn in global equities, as the selloff in Asian stock markets boosted the yen’s safe-haven appeal. Japan’s final manufacturing PMI was revised from 52.5 to 52.6. There are no reports due from Japan today, leaving risk sentiment in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls suffered sharp losses at the start of the week when China’s Caixin manufacturing PMI came in below expectations. Traders also priced in their expectations for further stock declines ahead of the expiration of the six-month ban on short-selling. The New Zealand GDT auction is scheduled later today and another decline in dairy prices could mean more losses for the Kiwi.

By Kate Curtis from Trader’s Way

594

USD

The US dollar continued to rake in gains during Tuesday’s trading sessions since risk aversion stayed in play. Data from the US economy was once again weaker than expected, with total vehicle sales declining from 18.2 million to 17.3 million in December. For today, the ADP non-farm employment change report is due and a 193K increase is eyed, weaker than the previous 217K gain.

EUR

The euro was in a very weak spot after the release of weaker than expected CPI estimates, as this led some analysts to price in more dovishness from the ECB. The headline CPI estimate came in at 0.2% instead of 0.4% while the core version stood at 0.9% instead of improving to the projected 1.0% figure. In addition, some of the top economies announced negative revisions for their growth forecasts. On a more upbeat note, the German unemployment change report came in better than expected with a 14K reduction in joblessness. Services PMI readings from the region’s top economies are due today.

GBP

The pound barely made any gains after seeing stronger than expected construction PMI data since traders are paring their holdings ahead of today’s services PMI release. Analysts are expecting to see a drop from 55.9 to 55.6 to indicate a slower pace of industry expansion, although stronger than expected data could yield stronger gains for the pound.

CHF

The franc took its cue from the euro and slid lower against its forex peers, as there were no reports from Switzerland to keep the currency supported. There are still no reports lined up from the Swiss economy today so it might continue to trail the euro and be sensitive to market sentiment.

JPY

The yen scored another winning day, thanks to risk aversion extending its stay in the financial markets. There were no reports out of Japan then and none are due today, although the Japanese currency is off to an early strong start during the Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi seem to be gearing up for another losing day since the Chinese Caixin services PMI came in weaker than expected and spurred another drop in risk-taking. In addition, the dairy auction in New Zealand resulted to a 1.6% fall in dairy prices. In Canada, underlying inflation data also came in below expectations. The Canadian trade balance and crude oil inventories report are due next.

By Kate Curtis from Trader’s Way

595

USD

The US dollar had a mixed performance as it advanced to the commodity currencies and pound but gave up ground to the yen and the euro. Data from the US economy was also mixed, with the ADP report printing strong results and the ISM non-manufacturing PMI falling short. Factory orders fell by 0.2% as expected while the trade balance showed a smaller deficit, although this was caused by drops in both imports and exports. The initial jobless claims report is due today.

EUR

The euro managed to recoup some of its losses even as the services PMI readings from its top economies came in mixed. German factory orders and retail sales data are due today and small gains are eyed, with stronger than expected results likely to boost the shared currency.

GBP

The pound was still in a weak spot even as the services PMI came in closely in line with expectations. The figure fell from 55.9 to 55.5 in December, slightly lower than the estimated 55.6 reading but still reflective of a slower pace of industry growth. Only the Halifax HPI is due from the UK today.

CHF

The franc took its cue from the euro and regained ground against most of its counterparts, even though there were no reports out of Switzerland yesterday. Swiss foreign currency reserves data are up for release today and a sharp gain could suggest that the SNB is starting to intervene in the currency markets once more.

JPY

The yen continued to rake in gains on the risk-off market environment, chalking up its largest wins to the commodity currencies. There were no reports out of the Japanese economy yesterday and none are due today, indicating that risk sentiment could stay in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to lose ground as risk aversion stayed in the financial markets. Not even the decline of 5.1 million barrels in crude oil inventories was enough to keep oil and the Loonie afloat, as traders focused on the buildup in other energy resources. In Australia, building approvals came in much weaker than expected while the trade balance came in line with expectations. A speech by BOC Governor Poloz is lined up, along with the Ivey PMI which might fall from 63.6 to 56.7.

By Kate Curtis from Trader’s Way