Trader’s Way, a prime online Forex and CFD broker, here offers you Daily Market Outlook by Kate Curtis, the company’s expert with deep trading and analysis experience.
[B]USD: Bullish[/B]
The U.S. dollar may have lost some ground against most of its major counterparts during yesterday’s trading but this was mostly a result of a rebound in risk and profit-taking at key levels. U.S. data came in mixed with durable goods orders showing a 5.2% decline, worse than the estimated 4.8% drop, while the previous month’s figure was revised down from 4.6% to 4.3%. Core durable goods, on the other hand, chalked up a 1.9% increase. This was much better than the estimated 0.3% uptick and the previous month’s 1.0% growth. Pending home sales also came in stronger than consensus as the report printed a 4.5% jump, outpacing the predicted 1.7% increase. For today, economic data could drive dollar pairs as the U.S. has the preliminary GDP reading and weekly jobless claims on tap. The U.S. economy is expecting to see an upward revision from -0.1% to 0.5% in its Q4 2012 GDP reading and, if that happens, demand for the U.S. dollar could rise as this could bring the Fed closer to tapering off its asset purchases.
[B]EUR: Bearish[/B]
The Italian bond auction surprisingly turned out better than many expected, although most market participants were actually expecting the worst. Yields didn’t spike as sharply as the 10-year Italian bond yield landed at 4.83% from 4.10%, still below the 5.00% threshold. However, political uncertainty still lingers in Italy as Bersani refuses to form a coalition with Grillio or Berlusconi, upping the odds for another election in the country. Another factor that could weigh on the euro is ECB head Draghi’s comments on the central bank being far from thinking about a withdrawal of monetary policy stimulus.
[B]GBP: Bearish[/B]
The pound managed to escape a strong selloff during yesterday’s trading as their GDP figure didn’t undergo any negative revisions from the initially estimated 0.3% contraction. However, the quarterly business investment report revealed that investors aren’t looking to park their money in the U.K. as the figure came in at 1.2%. This was way worse than the estimated 2.2% uptick for the period and the previous quarter’s 0.5% uptick. There are no major reports due from the U.K. today as pound pairs could trade sideways, awaiting further catalysts. Sentiment for this currency remains bearish though as the BOE has committed to loose monetary policy.
[B]JPY: Neutral[/B]
Yen traders continue to sit tight awaiting the nomination of the next BOJ head, but it seems that Japanese economic data has been leading to a few moves here and there. The Japanese manufacturing PMI posted a slight improvement from 47.7 to 48.5, still in the contractionary zone. Preliminary industrial production came in weak at 1.0%, lower than the consensus at 1.6% and the previous 2.5% increase. Earlier today, Japan reported a 5.0% annual increase in housing starts, lower than the estimated 8.9% growth and the previous 10.0% reading. However, Japanese officials claim that the economy is bottoming out but that it will be a long road to recovery. Japanese inflation reports are on tap for later today and weaker than expected figures could be bearish for the yen as it would imply the BOJ has to step up its game when it comes to warding off deflation.
[B]CHF: Neutral[/B]
There haven’t been any major reports from Switzerland lately, leaving most franc pairs moving sideways. Although the franc emerged as the safer European currency compared to the euro and pound, the SNB’s commitment to keeping the franc’s value down is preventing traders from buying up this currency.
[B]Commodity Currencies (AUD, CAD, NZD): Bearish[/B]
Commodity currencies have broken through key inflection points but seem to show signs of retracing at the moment. AUD/USD dipped below the 1.0200 major psychological support and may be on its way to the 1.0150 mark as Australia printed weaker than expected private capital expenditure and private sector credit data earlier today. Meanwhile, the New Zealand dollar was able to benefit from an improvement in ANZ business confidence data, as the reading climbed from 22.7 to 39.4. As for the Canadian dollar, the selloff seems overdone as USD/CAD has retreated from its recent highs, but Canadian current account data could push it back up.
[I]By Kate Curtis from Trader’s Way[/I]
USD: Bullish
Although the sequestration in the U.S. which started last week will likely have long-term negative effects on the economy, this event rendered price action dependent on risk sentiment once again. This means that the U.S. dollar could still be able to outpace most major currency counterparts because of its low yield and safe-haven status. Ben Bernanke already mentioned that the Fed will carry on with its asset purchase program, which means that the central bank shares a dovish stance just like everyone else. However, central bank decisions from other major economies this week could reveal which ones are much more dovish and the U.S. dollar still stands to benefit if further easing efforts are implemented elsewhere.
EUR: Bearish
Sentiment for the euro remains bearish this week as the ECB will make its monetary policy statement later on. There are no interest rate changes expected as there seems to be very little room for further cuts, but the central bank could decide to offer more LTROs for banks who are struggling with lending and liquidity. In last week’s speech, ECB head Mario Draghi expressed his openness for further easing as part of the central bank’s commitment to shift euro zone’s focus away from financial problems and back to economic growth. So far, there has been no clear resolution in Italy’s politics but Bersani did shun the possibility of forming a coalition government.
GBP: Bearish
The Bank of England is set to make its monetary policy decision also within the week and traders are starting to price in further asset purchases from the central bank. Minutes of the previous monetary policy decision showed that BOE head Mervyn King moved over to the bears’ side, which suggests that looser monetary policy is in the cards possibly within the next three months. No monetary policy changes from the British central bank this week would increase the odds of further easing in their next statement so the overall bias for pound pairs is still bearish.
JPY: Neutral
Kuroda has already been appointed by Prime Minister Abe as the next Bank of Japan Governor but incumbent leader Shirakawa will still head the BOJ rate decision for this week. No major changes are expected, as Shirakawa would probably make the transition as smooth as possible. Besides, Japan’s CPI figures came in line with expectations so far, although they still reflected the prevailing effects of deflation on the economy.
CHF: Neutral
Only the foreign currency reserves and a speech by Swiss National Bank head Thomas Jordan is scheduled for this week, and these aren’t due until the latter half. For now, the Swiss franc might stay at its current levels against the euro and the dollar, awaiting market catalysts. EUR/CHF and USD/CHF could react more to euro zone and U.S. data in the meantime.
Commodity Currencies (AUD, CAD, and NZD): Bearish
AUD/USD just broke below the key support zone at 1.0150-1.0200 as traders are anticipating a 0.25-0.50% rate cut from the RBA tomorrow. However, RBA Governor Glenn Stevens dismissed this possibility in an earlier speech as he talked about how the previous easing efforts are starting to kick in and that the current level of stimulus is appropriate for now. No rate cut could trigger a bounce back above 1.0200 for AUD/USD while an actual rate cut could push it closer to parity. The BOC is also scheduled to make its monetary policy statement this week and, even though no policy changes are expected, outgoing BOC Governor Carney could be less hawkish and not discuss rate hikes this time around. No reports are due from New Zealand, which means that the Kiwi could follow the Aussie’s behavior for the most part.
By Kate Curtis from Trader’s Way
USD: Bullish
The U.S. dollar is currently benefiting from risk flows as most central banks are about to take a dovish monetary policy stance. At the end of the day, the U.S. dollar is still king due to its lower yield and safe-haven status, even though the Fed’s Bernanke previously stressed that there was no need to withdraw asset purchases yet. So far this week, there were no major economic events from the U.S., except for some speeches from FOMC members who mentioned the challenges to the Fed’s monetary policy. Today, the U.S. will print its non-manufacturing PMI figure for February and possibly report a dip from 55.2 to 55.0. A stronger than expected figure could boost the U.S. dollar during the New York session.
JPY: Neutral
Yen pairs are trading cautiously of late, waiting for further clues on monetary policy and the exchange rate mechanism. Newly appointed BOJ head Haruhiko Kuroda hasn’t mentioned anything regarding these issues yet, and isn’t likely to do so during the BOJ monetary policy decision this week. Note that this is Shirakawa’s last monetary policy statement as BOJ head; he isn’t likely to make any drastic announcements before passing the baton to Kuroda. For now, the Japanese yen might act as a lower-yielding counterpart, which could rally if risk aversion sets in.
EUR: Neutral
The EUR/USD staged a meager recovery on Monday’s trading as it found support around the 1.3000 handle. Spanish employment figures came in stronger than expected. The unemployment change figure showed a 59.4K decrease in jobs instead of the 77.5K consensus, and lower than the previous figure of a 132.1K drop in hiring. Still, this indicates another month in job losses which doesn’t bode well for one of euro zone’s largest economies. Spanish and Italian services PMI are on tap for today, and both reports are expected to sink down from their previous readings. Eurozone retail sales are due later as well, but these reports aren’t likely to cause huge moves in euro pairs as traders are sitting on their hands prior to the ECB statement later this week.
GBP: Bearish
U.K. construction PMI fell below expectations for February, as the figure dipped from 48.7 to 46.8 – its lowest level since October 2009. Analysts were expecting a slight rebound to 49.2. This led to a test of the crucial 1.5000 level for GBP/USD but the pair seems to have bounced back up to the 1.5100 area again. The U.K. will today print its services PMI figure for February, and possibly show a drop from 51.5 to 51.1 for the month. A weaker than expected figure, especially one that is below the 50.0 mark, could push the GBP/USD to break below the 1.5000 major psychological level.
CHF: Bearish
The USD/CHF pair has been on a tear lately as the pair rallied to the .9400 major psychological resistance, which seems to be holding for now. Scrolling back further, or looking at a longer-term time frame would reveal that a double bottom pattern has formed, indicating further rallies. There are no major reports from Switzerland lately and none are due today.
Commodity Currencies (AUD, CAD, NZD): Bullish
As expected, the Reserve Bank of Australia kept rates on hold at 3.00% instead of cutting by 0.25-0.50% basis points. In his latest speech, RBA Governor Stevens did mention that the recent easing efforts of the central bank are just starting to take effect in the economy, which is a hint that no further stimulus is needed for now. Reversal signals have formed right on the 1.0150 support level on the AUD/USD, signaling that the pair’s selloff could be over. Retail sales also came in higher than consensus at 0.9% earlier today while the current account posted a smaller than expected deficit. There are no major reports due from New Zealand for this week, as the Kiwi could take its cue from the Aussie, which is enjoying a rally from the RBA’s decision to keep interest rates unchanged at 3.00%. As for the Canadian dollar, USD/CAD seems to have found a top around the 1.0300 handle, but is continuing to trade according to U.S. reports.
By Kate Curtis from Trader’s Way
USD: Bullish
It seems that a midweek reversal is gaining traction as the U.S. dollar gained against most of its higher-yielding counterparts during yesterday’s trading. Weak data from most major economies, such as Canada and the euro zone, dampened demand for riskier currencies. At the same time, strong U.S. data in the form of the ADP non-farm employment change report and factory orders figures boosted demand for the U.S. dollar. Only the trade balance and initial jobless claims reports are due from the U.S. today and these aren’t likely to alter risk sentiment as traders would focus on the central bank decisions on tap.
EUR: Bearish
The political stalemate in Italy continued to weigh on the euro for yet another trading day. Euro traders are also starting to price in downbeat expectations for today’s ECB rate decision where Draghi is slated to address the region’s economic weaknesses. Bear in mind that the euro zone just entered its third consecutive quarter in recession as the largest regions all posted a contraction for the last quarter of 2012. Although the central bank is likely to keep rates unchanged, watch out for a potential increase in LTRO loans or hints that the ECB is mulling alternative forms of easing.
GBP: Bearish
Pound pairs are consolidating for the day as traders sit tight ahead of the Bank of England rate decision. While the bank is expected to keep rates unchanged, many are pricing in an increase in asset purchases. Recall that BOE Governor King voted to increase easing during their last rate statement but the central bank was unable to do so since majority still voted to keep monetary policy unchanged. In the last six years, whenever BOE Governor King sided with the doves, additional QE is usually implemented within the next three months. However, he’s scheduled to step down from office soon and traders might pay more attention to what incoming Governor Mark Carney has planned for the BOE and the British economy.
Commodity Currencies (AUD, NZD, CAD): Neutral
AUD/USD retreated from its recent highs around 1.0300 and appears poised to test the 1.0200 support once more. Australian trade balance came in weaker than expected and this has been weighing down both the Aussie and Kiwi. As for the Canadian dollar, a downbeat BOC rate decision and a weaker than expected Ivey PMI triggered a break above 1.0300 for USD/CAD. There are no major reports due form the comdoll economies today as these currencies could trade purely on risk sentiment.
By Kate Curtis from Trader’s Way
USD: Bullish
The U.S. dollar lost ground to the euro and the pound during yesterday’s trading as both European currencies staged relief rallies when their respective central banks decided to make no changes to current monetary policies. However, all that could reverse today with the U.S. non-farm payrolls report on tap. The report could print a 162,000 increase in hiring for the month of February and this should keep the unemployment rate steady at 7.9%. A stronger than expected figure could provide support for the U.S. dollar since the Fed is closely monitoring progress in the labor market in considering when to taper off their asset purchases. A weaker than expected reading, on the other hand, might result in a dollar selloff as this would suggest that the U.S. economy will have trouble staying afloat once the job cuts from the sequestration kick in.
EUR: Bullish
The ECB decided to keep interest rates unchanged and their ongoing easing programs at their current levels as Governor Mario Draghi highlighted the progress in the euro zone. He did point out some downside risks to growth, along with the political uncertainty in Italy, but mentioned that the central bank isn’t committed to rate changes at the moment. This relatively upbeat statement was enough to push EUR/USD above the 1.3000 handle and back to the 1.3100 area, which is acting as resistance for now. There are no other economic events scheduled in the euro zone today as euro pairs could continue to trade on the positive sentiment resulting from yesterday’s ECB decision.
GBP: Bearish
Many were surprised to hear that the Bank of England didn’t make any additional asset purchases during their latest interest rate decision as BOE Governor Mervyn King previously voted to implement further stimulus. The BOE’s interest rate was also kept steady at 0.5%. This was enough to push GBP/USD back above the 1.5000 major psychological level to a high of 1.5080, but the pair was unable to sustain its rally. This reveals that market participants still believe that the lack of easing this time just increases the odds of further easing next time.
Commodity Currencies (AUD, NZD, CAD): Neutral
The Australian dollar and New Zealand dollar moved sideways during yesterday’s trading sessions as there were no major reports from Australia and New Zealand. Canada printed mixed economic reports as building permits came in below expectations while their trade balance showed a smaller than expected deficit. There are no major reports due from these commodity-dependent economies today as AUD/USD, USD/CAD, and NZD/USD could take their cues from the U.S. NFP release.
JPY: Bearish
USD/JPY just made a strong break above the 94.00 handle and seems to be making a beeline for the 95.00 mark, which could act as resistance. However, the U.S. NFP is set for release today and a stronger than expected figure could push the dollar up against the yen. Improved risk sentiment, particularly for the European currencies, is also weighing on the lower-yielding Japanese yen for now.
CHF: Bullish
The Swiss foreign currency reserves report released yesterday revealed that the SNB has already spent ten times as much as it did last year on keeping their franc peg. The total amount of foreign currency reserves now amounts to nearly 75% of their GDP, prompting market participants to think that the central bank might no longer be able to afford to keep the franc’s value down later on. This triggered a franc rally as sellers closed off their short Swissy positions.
By Kate Curtis from Trader’s Way
USD: Bullish
The U.S. dollar enjoyed a nice strong rally after the NFP figure came in higher than expected. The U.S. economy was able to add 236K jobs in February, higher than the estimated 162K increase. Although the previous month’s reading was revised down from 157K to 119K, the jobless rate was still able to drop from 7.9% to 7.7% in February. Since the Fed is closely monitoring improvements in the jobs market as part of their consideration in tapering off asset purchases, demand for the U.S. dollar jumped right after the upbeat figures were posted. There aren’t a lot of reports due from the U.S. at the first half of this week, which suggests potential consolidation for the next few days with a slight bullish bias towards the U.S. dollar because of its safe-haven status and relatively stronger economic standing.
EUR: Neutral
There are no major reports due from the euro zone this week as EUR/USD continues to test the 1.3000 major psychological support level. Only the German trade balance and French industrial production reports are on tap for today and these aren’t likely to trigger a strong break or bounce from the 1.0300 area. Keep an eye out for any political updates from Italy as these could result in surprise moves for the euro anytime within the week.
GBP: Bearish
The combination of weak U.K. economic outlook and strong U.S. economic data triggered a convincing break below 1.5000 for GBP/USD. The pair gapped down over the weekend and could continue to move lower for the rest of the week. However, a retest of the 1.5000 handle could be in the cards if profit-taking takes place as the U.K. isn’t set to print any major reports for today.
AUD: Bullish
Despite the Aussie selloff that took place after the U.S. NFP release, AUD/USD remains well above the 1.0200 major psychological support level. After all, Australia has also been enjoying strong economic reports recently while the RBA asserted that their recent easing efforts are appropriate and are just starting to take effect. No reports are due from Australia during the first few days of this week as AUD/USD could keep testing the 1.0200 area, but employment data due on Thursday could trigger either a bounce or a break depending on the actual results.
NZD: Bearish
NZD/USD seems to be forming a new range between the .8200 and .8300 major psychological levels as traders await the RBNZ rate decision later on this week. RBNZ head Graeme Wheeler seemed to hint at a rate cut during his one of his recent speeches, which suggests that traders could start pricing in negative expectations for the actual event as early as today.
CAD: Bullish
The Canadian dollar was the only major currency able to avoid a bloodbath from the upbeat U.S. NFP data as the Canadian economy also posted strong jobs growth during the period. Canada showed a 50.7K increase in hiring, higher than the estimated 7.8K growth and huge improvement from the previous month’s 21.9K drop in hiring. This was enough to keep their jobless rate steady at 7.0% instead of rising to 7.1%. No economic data is set for release from Canada this week but the recent labor figures could keep the Loonie afloat.
JPY: Neutral
USD/JPY broke above the 94.00 major psychological resistance and reached the 96.50 area during the NFP release on Friday yet the Japanese yen still managed to gain against its other counterparts. This suggests that traders are still risk averse, to the benefit of the lower-yielding yen. Data from Japan has been mixed so far as core machinery orders came in weak while M2 money supply beat expectations. BOJ monetary policy meeting minutes and Japan’s tertiary industry activity index are due today and these could result in clearer yen price action.
By Kate Curtis from Trader’s Way
USD: Neutral
There are no major reports due from the U.S. or other major economies today so dollar pairs could simply move sideways for the rest of the day. Keep in mind though that there are ongoing tensions between North and South Korea again, which could boost risk appetite and the U.S. dollar. However, the Federal budget balance release during the U.S. session could revive concerns about sequestration, which could keep dollar rallies at bay.
EUR: Neutral
The lack of reports from the euro zone could keep EUR/USD stuck inside its range for the time being as it currently found support near 1.3000 and resistance close to 1.3100. Last week, the ECB kept rates on hold but Draghi affirmed that the euro zone would rebound later on in the year and this could keep EUR/USD above 1.3000.
GBP: Bullish
The pound has been selling off aggressively so there might be some profit-taking at the start of this week as there are no top-tier data due from the UK. The manufacturing production and trade balance, which are just medium-tier reports, could have a bit of impact on pound movement. Manufacturing production is projected to stay flat in January while the trade deficit is expected to shrink slightly from 8.9 billion GBP to 8.8 billion GBP.
JPY: Bearish
USD/JPY has been on a tear lately as the pair recently broke past the 96.50 level. This suggests that yen bears have enough firepower left to eventually push the pair even higher. Tensions in the Korean peninsula could be negative for Asian currencies as the region is being put at peril. Earlier this week, Japan’s tertiary industry activity index missed expectations and posted a 1.1% decline.
Commodity Currencies (AUD, CAD, NZD): Neutral
Commodity currencies are moving sideways for the past few days as there are no major reports so far. AUD/USD is stuck between 1.0200 and 1.0300 while NZD/USD is cruising below the .8300 mark. USD/CAD has also taken a break from its rallies and is currently moving between 1.0225 and 1.0300. The top-tier reports aren’t due until Thursday when the RBNZ will make its monetary policy statement and Australia will print its employment report but be wary of traders that are pricing in expectations as early as today.
By Kate Curtis from Trader’s Way
USD: Bullish
The U.S. is set to release its retail sales report for February at 1:30 pm GMT today. The headline figure could show a 0.5% increase while the core version of the report could also show a 0.5% uptick as well. Take note that the U.S. NFP for February came in much stronger than expected as the economy added 236K jobs during the month, effectively bringing the jobless rate down from 7.9% to 7.7%. Jobs growth tends to result in stronger consumer spending, which hints at a potential upside surprise for the U.S. retail sales figures. Positive U.S. data has been boosting the Greenback these days as markets are trading on fundamentals.
EUR: Neutral
EUR/USD has been holding its ground above the 1.3000 major psychological level as it continues to move mostly sideways for the week. Perhaps the lack of economic events and political updates from the euro zone is to blame for the pair’s range-bound behavior, which could continue unless we see a significant shift in market sentiment.
GBP: Bearish
Although there are no major reports from the U.K. today, yesterday’s weak manufacturing production release could be enough to trigger another round of pound selling. The report chalked up a surprisingly huge 1.5% decline for January, its steepest decline in months, instead of staying flat during the period. This increases the odds that the country will suffer another economic contraction this quarter, putting the U.K. back in a technical recession.
Commodity Currencies (AUD, CAD, NZD): Bullish
AUD/USD just broke above the 1.0300 major psychological level yesterday as traders started pricing in positive expectations for the Australian employment report due tomorrow. Meanwhile, NZD/USD is still stuck in a range as traders await the actual RBNZ interest rate decision. Rumor has it that RBNZ head Graeme Wheeler is mulling a rate cut just to keep the Kiwi’s gains in check but other analysts expect no changes in monetary policy at all. If that’s the case, NZD/USD could rally back up to the .8300 major psychological resistance and even make a break above that.
JPY: Neutral
The yen has been staying afloat so far this week as traders are still uneasy about buying up higher-risk currencies. Data from Japan has been mixed though as manufacturing showed an improvement while the services sector posted a downturn. No major reports are due from Japan today as the yen could be extra sensitive to risk sentiment as usual.
By Kate Curtis from Trader’s Way
USD: Bullish
The U.S. dollar once again found support from stronger than expected economic data during yesterday’s trading. The retail sales figure for February came in at 1.1%, better than the estimated 0.5% uptick, while the core version posted a 1.0% increase for the month. For today, the U.S. will print its PPI and initial jobless claims, both of which could once more boost the U.S. dollar if the actual data comes in strong.
EUR: Neutral
There aren’t a lot of catalysts from the euro zone these days as EUR/USD continues to trade carefully below the 1.3000 area. For now, euro pairs are acting sensitive to their counter currencies’ events. In particular, EUR/USD sold off when strong U.S. retail sales boosted the dollar while EUR/JPY edged higher on uncertainty in Japan.
GBP: Bearish
GBP/USD seems to have found resistance close to 1.5000 during yesterday’s trading as strong U.S. retail sales prevented the pair from heading any higher. There are no major reports from the U.K. today but the downbeat outlook for the U.K. and expectations of further BOE easing could continue to weigh the pound down.
AUD: Bullish
The Australian economy just printed a very strong jobs report for February as the economy added 71.5K jobs during the quarter and kept the jobless rate steady at 5.4% instead of rising to 5.5%. This suggests that the jobs sector is making a strong rebound and doesn’t need further stimulus from the RBA. On top of that, the previous month’s figure enjoyed an upward revision from 10.4K to 13.1K
NZD: Bearish
The Kiwi sold off aggressively after the RBNZ delivered its monetary policy statement during today’s Tokyo session. The central bank did keep rates on hold at 2.50% as expected but Wheeler noted the downturn in domestic economic activity. He blamed the worsening drought conditions and the strength of the New Zealand dollar for this slowdown, citing that the Kiwi is overvalued by 10-15%.
By Kate Curtis from Trader’s Way
USD: Neutral
The U.S. dollar lost a lot of ground to its major currency counterparts during yesterday’s trading as we saw a short squeeze, particularly for GBP/USD and EUR/USD. It seems that the selloffs are no longer able to carry on and most traders simply decided to book profits at the pairs’ previous lows. Data from the U.S. has been mostly strong as the PPI and core PPI came in line with expectations while the initial jobless claims report printed a better than expected figure. Watch out for today’s set of data (CPI, core CPI, Empire State manufacturing index, and University of Michigan consumer sentiment figure) during the New York session as these could confirm whether the U.S. dollar is still trading on fundamentals or has shifted to risk sentiment.
EUR: Bearish
The euro may have outpaced the U.S. dollar by a huge lead during yesterday’s trading as most traders decided to close out their short euro positions at the pair’s recent lows. However, there’ s a chance that the recent EUR/USD rally might not have enough energy to stay above the 1.3000 major psychological level for long as fundamentals in the euro zone are still very weak. Take note though that EU officials are having their economic summit today until the end of the week, which might be an event risk for euro pairs.
GBP: Bearish
The sterling was also able to outrun the U.S. dollar during yesterday’s trading as GBP/USD successfully broke above the 1.5000 major psychological level and later on the 1.5100 major psychological level. Some say that this was simply a result of a short squeeze for the pair as traders locked in their profits on their short pound positions. After all, fundamentals in the U.K. are still shaky and the BOE is still inclined to implement further easing. If the rally shows signs of fading, watch out for potential reversals around the major and minor psychological levels, possibly during the U.S. session.
AUD: Neutral
It looks like the recently released strong jobs figures from Australia were a fluke as their statisticians reported an error in the report. However, the Australian dollar still managed to rally strongly against the U.S. dollar, mostly because of the recent short squeeze. No major reports are due from Australia for the rest of the day as the pair’s rally could retreat upon reaching the 1.0400 major psychological level, depending on how U.S. economic releases turn out.
NZD: Neutral
Despite the downbeat RBNZ rate statement wherein Wheeler talked about the overvalued Kiwi, the New Zealand dollar was able to pocket huge gains against the U.S. dollar as it rallied back above .8200 during yesterday’s U.S. session. If the effect of the short squeeze lasts until the end of the week, the Kiwi could keep rallying to its previous highs. On the other hand, if the rally fizzles, NZD/USD could be on its way to test the .8200 support once more.
JPY: Bullish
Japanese Prime Minister Shinzo Abe seems to be having a tough time garnering enough support for Iwata, who he wants to appoint as deputy governor of the BOJ. Iwata is a known dove, just like the newly appointed BOJ head Kuroda, and putting him in position would mean more aggressive policies to ward off deflation and weaken the yen. Unless Abe is able to get enough votes for Iwata’s nomination though, the yen could continue to gain steadily.
By Kate Curtis from Trader’s Way
USD
Markets could be in for a quiet trading day today as there are no top-tier releases from the major economies that could have a significant impact on risk sentiment or a lasting effect on dollar pairs’ movements. The U.S. is set to print its final GDP reading for the last quarter of 2012 and an upward revision from the previous 0.1% figure is expected. Analysts are expecting the final figure to come in at 0.5%, which might be positive for the dollar as it would indicate that growth was stronger than initially estimated. Keep an eye out for the release of the Chicago PMI as well, with the report expected to print a drop from 56.8 to 56.5.
EUR
The euro zone received mixed data today as Germany printed weaker than expected employment figures yet showed higher than expected retail sales. Consumer spending was up by 0.4% instead of the estimated 0.5% decline while the employment change fell short of expectations of the 2K increase in hiring and posted a 13K drop instead. No other reports are due from the euro zone today as EUR/USD still hangs on to the 1.2800 area.
GBP
Only the low-tier index of services was released from the United Kingdom today and the report came in at -0.2% as expected. This is lower compared to the previous reading that came in flat. No other reports are due from the U.K. today yet GBP/USD continues to edge slightly higher.
JPY
Japan is set to print its household spending report and CPI data towards the end of today’s U.S. session. Household spending is projected to rise by 0.4% on an annual basis, down from the previous 2.4% reading. The Tokyo core CPI is expected to come in at -0.6%, same as the previous reading, while the national core CPI could print a -0.4% figure. Lower than expected inflation figures could push the BOJ to implement even more aggressive easing policies as soon as possible.
CHF
There are no reports due from Switzerland today, which suggests that franc pairs could be in for quiet trading for the rest of the sessions.
Commodity Currencies (AUD, NZD, CAD)
Australia and New Zealand are on bank holidays today in observance of Holy Thursday. Canada is set to print its monthly GDP figure and possibly show a 0.1% rebound in growth from the 0.2% dip seen during the previous month. Weaker than expected data could trigger a sharp Loonie selloff as this might place Canada in danger of posting negative growth for the entire quarter.
By Kate Curtis from Trader’s Way
USD
Most banks are on a holiday today, paving the way for quiet trading conditions. Take note though that it’s the last trading day for the month and the quarter, which could also set the stage for profit-taking moves towards the end of the U.S. session. Bear in mind that low liquidity could result in more volatile price action as well. The U.S. is scheduled to release a few medium-tier reports, including the core PCE price index which is rumored to be the Fed’s preferred inflation measure.
EUR
The euro managed to edge slightly higher against the U.S. dollar during yesterday’s trading but it seems the currency is unable to make any further headway. European banks are on holiday today but France is set to print its consumer spending report within today’s London session and possibly report a 0.3% rebound from the previous 0.8% decline.
GBP
GBP/USD is testing the major psychological resistance at the 1.5200 area once more as the pair climbed in yesterday’s trading. Without any major market catalysts on tap, it seems unlikely that GBP/USD could make a strong break above the 1.5200 to 1.5250 levels. Do stay on your toes for potential profit-taking around those recent levels.
CHF
Swiss banks are on holiday today, which suggests that franc pairs could be in for sideways trading for most of the day. USD/CHF seems set on staying above the -.9500 major psychological support while EUR/CHF has been edging lower gradually.
JPY
Japanese housing starts came in much stronger than expected at 3.0% for February, better than the estimated 1.0% decline but lower than the previous 5.0% jump in January. No other reports are due from Japan this week as the yen pairs could be vulnerable to profit-taking scenarios and possible movements after Japanese repatriation efforts are booked.
Commodity Currencies (AUD, NZD, CAD)
There are no economic reports due from these commodity-dependent economies for the day, which suggests that AUD/USD, USD/CAD, and NZD/USD could simply take their cues from U.S. reports or might be in for quiet trading until the end of the week.
By Kate Curtis from Trader’s Way
USD
Traders are now back from the shortened trading week last week, which suggests we could see more action on the charts for the coming days. Today, the U.S. will release its ISM manufacturing PMI for March and possibly show that the figure stayed at 54.2 for the period. A higher than expected reading would reflect a stronger expansion in the industry, which would be positive for the U.S. economy and possibly the U.S. dollar. A weaker than expected result could hint at slower manufacturing activity, which could be negative for the U.S. dollar.
EUR
European banks are still on a holiday today, which could mean euro pairs are in for quiet trading once more. Take note though that Cyprus banks are set to reopen this week and it would be the start of deposit taxes and withdrawal limits. So far, no bank run has been reported but it is likely that flight of capital will be seen, particularly for foreign investors with large deposits in the country. If that’s the case, the euro could head further south in the next few trading days.
GBP
Banks in the United Kingdom are still on holiday for today so pound pairs might see more sideways movement for the next few hours. Traders might want to start pricing in their expectations for this week’s BOE rate decision and business PMIs, which could dictate pound price action for the near term. The BOE is expected to keep rates and bond purchases unchanged but we might hear of dovish remarks from King if the manufacturing and construction PMI releases this week turn out worse than expected.
CHF
There are no reports due from Switzerland today as USD/CHF and EUR/CHF continue to trade carefully. When trading these pairs, make sure you keep tabs on updates regarding Cyprus’ banking situation or U.S. economic data (ISM manufacturing PMI) to figure out where they could be headed.
JPY
Japan just released a couple of weaker than expected figures during today’s Asian session, which could weigh on the yen for the next few hours. The Tankan manufacturing index came in at -8 from -12 instead of rising to -7. The non-manufacturing component rose from 4 to 6, short of the consensus at 8. These show that manufacturing and services activity in Japan is weaker than projected for the first quarter of 2013.
Commodity Currencies (AUD, CAD, NZD)
There are no reports due from Australia, Canada, or New Zealand for today. China just printed weaker than expected manufacturing PMI for March as the reading climbed from 50.1 to 50.6 instead of the projected 51.6 reading. Meanwhile, the HSBC flash manufacturing PMI came closer in line with the consensus of 51.7 as it logged in a 51.6 reading for March.
By Kate Curtis from Trader’s Way
USD
The weak U.S. ISM manufacturing PMI figure for March triggered a round of dollar selling during yesterday’s New York session as the actual reading slipped from 54.2 to 51.3. This reflects how the expansion in the manufacturing industry slowed down during the month, making traders worry that the U.S. will be unable to sustain its recovery. For today, there are no major U.S. reports on tap so we might see quiet trading conditions during the New York hours.
EUR
The euro was able to recover against the U.S. dollar during yesterday’s trading hours despite the lack of liquidity during the London session. Only medium-tier reports are due from the euro zone today but these reports could still usher in some volatility for euro pairs. Germany will be releasing its CPI while Spain will print its employment data and manufacturing PMI. Italy is also set to report is manufacturing PMI during the euro session. Bear in mind that weaker than expected readings could weigh on the euro while stronger than expected reports could give the shared currency a boost. Euro zone employment data is also set for release later on during the day.
GBP
The pound was able to take advantage of dollar weakness during yesterday’s market hours yet the currency might be forced to return its recent gains today if the U.K. manufacturing PMI falls below expectations. The reading for March is projected to improve from 47.9 to 48.9, reflecting slower contraction in the industry. If it fails to impress, it could have a negative impact on the upcoming BOE rate decision, which might lead traders to start selling the pound early. After all, policymakers did remark that they will be keeping close tabs on business surveys to figure out if more easing is necessary or not.
CHF
Switzerland will be reporting its SVME PMI figure for March during today’s London session. The reading is expected to dip from 50.8 to 50.5 for the month, showing that the expansion in the manufacturing industry was slower during the period. Stronger than expected data could push USD/CHF lower while weaker than expected results could give the pair a boost.
JPY
There are no major releases from Japan for now as traders await the BOJ interest rate decision on Thursday. Yen pairs are trading on country-specific events, with USD/JPY selling off after the U.S. printed a weak ISM manufacturing PMI figure.
Commodity Currencies (AUD, CAD, NZD)
The RBA decided to keep rates on hold at 3.00% as expected, barely triggering any reaction on Aussie pairs. Governor Glenn Stevens noted that while global growth has slowed below average pace, downside risks to the Australian economy have been reduced. He remained optimistic as he pointed out that there are still plenty of opportunities for growth. As for Canada and New Zealand, there are no reports on their schedules, which might mean we’ll see mostly sideways trading for USD/CAD and NZD/USD.
By Kate Curtis from Trader’s Way
USD
A couple of top-tier data are due from the US today. These are the ADP non-farm employment change and the ISM non-manufacturing PMI. The ADP report could show a slight improvement from 198K to 203K for March, reflecting a slight increase in hiring. Meanwhile, the ISM report is expected to post a dip from 56.0 to 55.9, showing that manufacturing still expanded during the month. Take note that the US dollar is trading on fundamentals lately, which suggests that strong data could boost the dollar while weak figures could spark a selloff.
EUR
There are no major reports from the euro zone today, which could suggest quiet trading for euro pairs. Take note though that there were several weak data released from euro zone’s top economies recently, as Spain and Italy both printed weak manufacturing PMIs, suggesting that growth isn’t so strong in some of the large nations in the region.
GBP
Another potential pound selloff could be in the cards if the British construction PMI disappoints. Yesterday, the weaker than expected manufacturing PMI set off a massive round of pound selling, pushing GBP/USD to the 1.5100 area. The construction report could print an improvement from 46.8 to 47.7 but a disappointment is likely since mortgage approvals are down in the past few months.
CHF
Weaker than expected Swiss SVME PMI is lifting franc pairs for now as there are no major reports on Switzerland’s schedule. Keep an eye out for euro zone data or US reports when trading EUR/CHF or USD/CHF.
JPY
Earlier today, Prime Minister Abe and BOJ heads Kuroda and Iwata spoke in front of the Japanese parliament and outlined some of their plans for monetary policy. They are considering scrapping the bank note rule, which is a limit on the total government asset purchases. If this happens, the BOJ could have more scope for easing as they could decide to increase asset purchases, extend the duration of longer-term bonds, or implement an open-ended asset purchase program just like the Fed. The decision is still up to the rest of the BOJ policymakers and we’ll hear more of this on the BOJ rate statement tomorrow.
Commodity Currencies (AUD, CAD, NZD)
Commodity currencies managed to stay resilient in yesterday’s trading as the 7.4% rise in ANZ commodity prices boosted these currencies. In addition, Australia’s trade balance came in strong as the deficit shrank to 0.18 billion AUD. No other reports are due from the commodity-dependent economies for the rest of the day, which suggests that US data could have a large impact on the price action of AUD/USD, USD/CAD, and NZD/USD.
By Kate Curtis from Trader’s Way
USD
The U.S. dollar suffered another selloff during yesterday’s trading as the economy printed a couple of weaker than expected data. The ADP non-farm employment change, which can be considered as a preview of the NFP release, came in below the expected 203K reading and printed a mere 158K increase in hiring for March. Meanwhile, the ISM non-manufacturing PMI came in at 54.4 instead of the estimated 55.9 figure, showing that the expansion in the industry slowed down more than expected. There are no major releases from the U.S. today but be mindful of speeches from FOMC members Bernanke, Yellen, and George as they could talk about future monetary policy plans.
EUR
The euro was able to recover slightly against the U.S. dollar, which suffered a selloff due to weak U.S. data. The only report released from the euro zone yesterday was the CPI flash estimate which came in higher than expected at 1.7%. The ECB rate decision today could be a bigger market mover for euro pairs even though the central bank could still keep rates on hold for the meantime. However, recent uncertainties in the euro zone could result to a less upbeat statement from Governor Draghi, which might weigh on the euro.
GBP
Despite weaker than expected construction PMI from the U.K., the pound managed to pocket a few gains as GBP/USD pulled up to the 1.5150 area. The construction PMI came in at 47.2 from 46.8, a slight improvement but still lower than the estimated 47.7 reading. With BOE policymakers keeping close tabs on business surveys, the weaker than expected PMIs might warrant a pessimistic statement from the BOE during the interest rate decision today. No monetary policy changes are expected but BOE Governor King could focus on the challenges to the British economy.
CHF
There were no major reports released from Switzerland during yesterday’s trading but the franc managed to catch some gains as USD/CHF fell from 0.9500 due to weak U.S. economic data. There are no reports due from Switzerland today which suggests that franc pairs could move to the tune of economic data from other economies.
JPY
The BOJ announced their new quantitative and qualitative easing measures today, triggering a sharp yen selloff. Kuroda mentioned that they will keep implementing these measures until the economy is able to achieve its 2% inflation target. They doubled their monetary base for easing, eliminated the bank note rule, and declared that they plan to achieve their inflation goal within two years. The vote on these aggressive easing measures was close to unanimous, signaling that central bankers are very serious about warding off deflation. Yen selling could continue for the rest of the day as USD/JPY edges close to 94.00.
Commodity Currencies (AUD, NZD, CAD)
Commodity currencies were unable to sustain their rallies during yesterday’s trading as weak economic data weighed on risk sentiment and dragged higher-yielding currencies lower. AUD/USD fell short of testing the 1.0500 major psychological level while NZD/USD came close to .8450. Australia released stronger than expected building approvals and retail sales data for February during today’s Asian session, confirming that the recent RBA easing efforts are just starting to take effect. No other reports are due from the comdoll economies for the rest of the day as AUD/USD, USD/CAD, and NZD/USD could be swayed by risk sentiment once more.
By Kate Curtis from Trader’s Way
USD
The U.S. dollar rallied against most of its counterparts during the Asian session and first few hours of the London session as the strong USD/JPY rally affected other dollar pairs. However, the dollar choked up its recent gains to the euro, pound, and commodity currencies when risk appetite surged later in the day. Weekly jobless claims data came in weaker than expected, confirming that the U.S. jobs market is currently struggling. The upcoming NFP release today should provide a better picture of how the labor market is faring as the actual figure could post a weaker increase of 198K for March. Note that the ADP non-farm employment change figure and the Challenger job cuts report both posted bleak results, which hint at a downside surprise for the NFP.
EUR
The euro lost ground to the U.S. dollar when ECB Governor Draghi sounded more pessimistic than before in his recent rate statement. However, the central bank still refrained from making any monetary policy changes as Draghi emphasized that they’re running out of options. Only the euro zone retail sales and final GDP figures are on tap from the region today, which suggests that the euro might rather take its cue from the resulting sentiment from the U.S. NFP report.
GBP
Despite the quick GBP/USD selloff that took place during the start of the London session, the pair was able to recover right away when the BOE didn’t announce any additional stimulus measures. On top of that, services PMI came in stronger than expected and showed a large expansion for the month of March as the reading came in at 52.4 instead of declining from 51.8 to 51.4. Only the Halifax HPI is due from the U.K. today and a weaker increase in house prices is expected.
CHF
There were no reports released from Switzerland yesterday but USD/CHF managed to stay below the .9500 handle despite the strong round of dollar-buying that took place. Today, Switzerland will print its foreign currency reserves report. Note that the previous release hinted that the SNB’s peg is growing more and more expensive and today’s release should highlight the unsustainability of their intervention efforts.
JPY
The yen continues to sell off because of the BOJ’s aggressive easing plans announced yesterday. USD/JPY has already surged past key resistance levels and appears to be testing 97.00 prior to the NFP release, which could spark a quick selloff. However, analysts believe that the pair is headed for the 100.00 mark as the additional stimulus from the BOJ should keep the yen’s value down.
Commodity Currencies (AUD, CAD, NZD)
Aside from the strong Australian retail sales and building approvals data, there weren’t any other reports printed from the comdoll economies yesterday. This left the currencies vulnerable to dollar behavior and risk sentiment, which might be the same case for today. Canada is set to print its trade balance, jobs data, and Ivey PMI later today though and this could spark volatility for USD/CAD.
By Kate Curtis from Trader’s Way
USD
The U.S. economy showed weaker than expected jobs growth for March as the NFP report printed an 88K figure instead of the projected 198K increase. The previous figure was revised up from 236K to 268K while the jobless rate ticked down from 7.7% to 7.6%, mostly because of a result of a drop in participation rate. This jobs report resulted in a sharp dollar selloff as this emphasized the Fed’s decision to keep monetary policy unchanged and refrain from withdrawing asset purchases. There are no reports due from the U.S. today as the dollar could recover from its losses last Friday.
EUR
Despite the drop in euro zone retail sales, the euro was able to rally against the U.S. dollar and the Japanese yen on Friday as the U.S. posted weak NFP data while the yen continued to weaken after the recent BOJ decision. Only the euro zone Sentix investor confidence and German industrial production data are on today’s schedule, which suggests quiet trade for the euro. Take note that EUR/USD has reached the 1.3000 major psychological level and this week’s market sentiment and euro zone events could determine if this resistance mark will hold or not.
GBP
The pound staged a strong rally on Friday as it took advantage of yen and dollar weaknesses. The U.K. Halifax HPI came in line with consensus as it clocked in a 0.2% increase in house prices, lower than the previous month’s 0.5% growth. There are no reports due from the U.K. today, which suggests that GBP/USD’s and GBP/JPY’s rally could continue.
CHF
USD/CHF broke below the key .9400 major psychological support level on Friday when the U.S. printed a weak NFP figure. A potential retest could be in the cards for today as there are no major reports due from the U.S. or Switzerland.
JPY
The Japanese yen continued its losing streak on the heels of the BOJ’s aggressive easing announcement on Thursday. USD/JPY is currently trading above the 98.00 handle, despite the weak U.S. NFP figure, and could be headed for the 100.00 mark this week. There are no major releases from Japan for today, but the BOJ minutes are set for release during tomorrow’s early Asian session.
Commodity Currencies (AUD, NZD, CAD)
The Loonie suffered a sharp selloff against the Greenback on Friday when Canada showed a weak jobs report. Joblessness increased by 54.5K in March, pushing the unemployment rate up from 7.0% to 7.2% during the month. Trade balance also missed expectations as it showed a 1.0 billion CAD deficit instead of the expected 0.2 billion CAD surplus. However, the Ivey PMI beat expectations as the figure jumped from 51.1 to 61.6, outpacing the estimate at 52.4. There are no reports due from the comdoll economies for today, which suggests that the trends from Friday could continue.
By Kate Curtis from Trader’s Way
USD
There were no major reports released from the U.S. yesterday, allowing the Greenback to recover from some of its recent losses. There are no reports due from the U.S. once more, which suggests possible quiet trading for the New York session. Do keep close tabs on Q1 earnings reports though as this could affect U.S. equities and overall market sentiment. Take note that fundamentals have been driving the dollar lately and that weak earnings reports could put the dollar back on its downtrend.
EUR
Minor euro zone reports came in mixed during yesterday’s trading as the Sentix investor confidence figure fell below consensus while the German industrial production report in strong. Investor confidence dipped from -10.6 to -17.3 in April, reflecting increased pessimism in the euro zone region. Meanwhile, Germany’s industrial production rose by 0.5% in February while the previous month’s figure suffered a downward revision from 0.0% to -0.6%. There are no major reports due from the euro zone today.
GBP
The pound retraced from its recent gains against the U.S. dollar on Monday as the 1.5350 minor psychological level acted as resistance for the pair. Today’s U.K. data could push GBP/USD back on an uptrend if the actual figures come in strong. The manufacturing production report could show a 0.4% rebound from the 1.5% drop seen before while the trade deficit is expected to widen from 8.2 billion GBP to 8.7 billion GBP.
CHF
USD/CHF stayed mostly in consolidation during yesterday’s trading sessions as the pair was able to keep its head below the .9400 handle. Today’s Swiss reports could determine whether the pair will bounce back up .9400 or head further south. Switzerland will print its monthly CPI figure and possibly show another 0.3% uptick and will also release its latest retail sales report, which is expected to jump by 2.9% on a year-to-year basis.
JPY
Once again, the Japanese yen continues to lose ground against its major counterparts as the BOJ’s aggressive easing measures will have a long-term effect on their currency. Analysts are saying that USD/JPY could reach 100.00 as early as this week, with a potential target of 110.00 in the longer-term. Only the monetary policy meeting minutes were released from Japan today and this didn’t have such a huge impact on yen action as the selloff remains underway.
Commodity Currencies (AUD, CAD, NZD)
Commodity currencies appear poised to test significant inflection points as AUD/USD is on its way back to 1.0500 while NZD/USD is testing .8500. Earlier today, New Zealand printed an improvement in its NZIER business confidence as the figure climbed from 20 to 23 in the first quarter of the year. Chinese CPI is due later today and would probably result in a quick selloff if the actual figure comes in below 2.5%, which is already lower than the previous 3.2% reading. Keep an eye out for the release of Canadian building permits and housing starts during the New York session as this could determine whether USD/CAD will stay on its downtrend or not.
By Kate Curtis from Trader’s Way