Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
242

USD

The US dollar showed signs of strength in the past few trading hours as risk aversion gripped the financial markets once more. Martial law has been declared in Thailand and this kind of geopolitical tension usually turns out to be positive for the safe-haven dollar. There have been no reports released from the US economy in the latest New York trading session. Today, a bunch of Fed officials are scheduled to give testimonies and probably provide a preview of the FOMC minutes to be released later this week.

EUR

The euro managed to hold on to its recent levels to the US dollar, despite the downbeat remarks from Bundesbank President Weidmann. Of course he did stress that exchange rate targeting might wind up with harmful effects on the economy but he did point out that further easing might be needed, increasing the odds of an ECB stimulus announcement next month. German PPI is up for release today and a flat reading is eyed.

GBP

The pound made a small recovery in the past few trading sessions, as traders booked profits ahead of today’s CPI release. Price pressures probably improved in April, as analysts are expecting to see an increase in CPI from 1.6% to 1.8%. Underlying inflation might still point to weak spots though, with PPI input to stay flat and PPI output to show a mere 0.2% uptick.

CHF

The franc lost further ground to the dollar as risk sentiment worsened in recent trading. There have been no reports released from Switzerland yesterday and there are none lined up for today, which suggests that USD/CHF price action might depend on US events.

JPY

The yen had a mixed performance, as pairs simply reacted to currency-specific data. There were no reports released from Japan recently, except for the stronger than expected core machinery orders data. The Nikkei closed lower yesterday and reached new session lows, indicating that risk aversion is taking over price action, which is good for the lower-yielding yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened in the latest trading sessions, with the proposed budget cuts and downbeat RBA minutes weighing most on the Australian dollar. The Kiwi also saw its share of losses despite the stronger than expected PPI readings released in the early Asian trading session. Meanwhile, the Loonie managed to stay resilient but the wholesale sales release later today might change that as a mere 0.4% uptick is slated to follow the previous 1.1% gain.

By Kate Curtis from Trader’s Way

243

USD

The US dollar drew support from risk aversion in yesterday’s trading sessions, as the declaration of martial law in Thailand brought geopolitical risk back in the mix. There were no reports released from the US economy but a few Fed officials gave speeches, providing a preview of how the upcoming FOMC minutes release might turn out. So far, the views have been mixed, with some supporting an earlier than expected rate hike and others suggesting that stimulus must be maintained. The FOMC minutes might contain nothing new, but traders are waiting for the actual speech by Fed head Yellen to see what the Fed has planned.

EUR

The euro erased some of its recent gains when German PPI printed weaker than expected results. Producer prices are down 0.1% in the euro zone’s largest economy, reviving fears of deflation in the region and leading to more calls of further easing next month. Only the euro zone current account and consumer confidence data are up for release today and these aren’t expected to have a huge impact on euro movement.

GBP

The pound recovered to its counterparts when UK CPI churned out stronger than expected results. The headline figure climbed from 1.6% to 1.8%, outpacing the consensus at 1.7%, while the core figure showed a 2.0% gain versus the estimated 1.8% increase in price levels. Today, the BOE will release the minutes of its latest monetary policy meeting and reveal whether they are still holding on to their rate hike bias or not. Recall that the BOE inflation report turned out to be a bit dovish and the minutes of their latest policy meeting might have the same tone.

CHF

The franc struggled to hold on to its recent gains but managed to chalk up a few losses to the dollar. There were no reports released from Switzerland then and none are due today, which suggests that further consolidation or risk off moves might be seen among franc pairs.

JPY

The yen advanced against most of its major counterparts when risk aversion returned to the markets in yesterday’s trading sessions. Traders don’t expect the BOJ to make any actual monetary policy changes today since Japan’s economic reports have been mostly strong so far. Of course this excludes the effect of the recent sales tax hike and data including this change might have more impact on yen direction.

Commodity Currencies (AUD, NZD, CAD)

Risk aversion got the better of the comdolls in recent trading, causing the Aussie, Kiwi, and Loonie to break below key technical levels against the dollar and the yen. Dovish RBA minutes and the Australian budget cuts weighed on the Aussie the most, pushing AUD/USD below the .9300 mark. Westpac consumer sentiment showed a 6.8% decline in Australia, leading to more losses for the currency. No other reports are lined up from the comdoll economies today.
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By Kate Curtis from Trader’s Way

244

USD

The US dollar barely reacted to the minutes of the latest FOMC meeting, as the report revealed nothing new. Policymakers mentioned that they are not very concerned about accommodative monetary policy stoking inflationary pressures at the moment, as the CPI remains below the Fed’s 2% inflation target. However, they did start looking into gradual exit strategies involving short-term interest rates. The main takeaway from the minutes of the meeting is that the Fed is starting to consider how to slowly tighten monetary policy without shocking the markets. US existing home sales, initial jobless claims, and flash manufacturing PMI are due today.

EUR

The euro lost ground to the dollar again when the euro zone current account balance turned out weaker than expected at a surplus of 18.8 billion EUR instead of the estimated 24.2 billion EUR. German and French PMIs are up for release today and this might dictate whether the euro is in for a deeper selloff or not. Small downticks are expected for the manufacturing and services sectors of both economies, which would reflect a slower expansion in these industries.

GBP

The pound continued its ascent to the dollar when UK retail sales data showed stronger than expected results. A 1.3% increase was seen, higher than the projected 0.4% uptick, while the previous month’s reading enjoyed an upgrade. UK’s revised GDP figure is up for release today and an upward revision from the previously reported 0.8% reading might lead to more gains for the pound.

CHF

The franc chalked up small losses in the latest trading sessions as the lack of data from Switzerland weighed on the currency. There are still no reports due from Switzerland today, which suggests further consolidation or weakness for the franc.

JPY

The yen gave back its recent gains when risk appetite returned to the markets. The BOJ made no changes to monetary policy as expected but provided an upbeat outlook for capital expenditures. Earlier today, the freshly released Japanese manufacturing PMI showed an increase from 49.4 to 49.9, just a notch away from indicating industry expansion. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls recovered off their declines in recent trading when risk sentiment improved. Data from Australia actually showed weakness in the consumer sector while New Zealand’s credit card spending report reflected a slowdown. For today, Canadian retail sales data are due and might come in weak thanks to the recent drop in hiring.

By Kate Curtis from Trader’s Way

245

USD

The US dollar sprang back to life in recent trading sessions, despite mixed data from the US economy. The flash manufacturing PMI surged from 55.4 to 56.2, outpacing the consensus at 55.6. However, existing home sales and initial jobless claims both fell short of expectations. Only the new home sales report is due from the US economy today and it might show a rise from 384K to 426K.

EUR

The euro resumed its drop to its major counterparts when euro zone PMI came in mostly below expectations. In particular, data from France was much weaker than expected since both manufacturing and services PMIs slipped back below the 50.0 level and indicated industry contraction. As for Germany, the manufacturing PMI showed a slower expansion while the services PMI showed a pickup. Overall, euro zone manufacturing PMI was below consensus while services was strong at 53.5. German Ifo business climate data is due today and a dip from 111.2 to 111.0 is eyed.

GBP

The pound gave back some of its recent gains when the public sector net borrowing report printed a higher government deficit. The report showed that borrowing was at 9.6 billion GBP versus the estimated 3.6 billion GBP figure while the previous month’s report received a downgrade. This revived fears of debt troubles in the UK and was enough for traders to ignore the UK revised GDP reading of 0.8%, which showed upgrades in consumer spending and business investment. There are no reports due from the UK today.

CHF

The franc continued to flash signs of weakness as there were no reports from Switzerland to give it a boost. There are still no reports due today so it should be all about franc weakness or consolidation until the end of the week.

JPY

The yen had a mixed day, as it lost ground to the pound but consolidated against most of its major counterparts. There were no reports released from Japan then and none are due today, which suggests that more currency-specific moves might be seen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a slower day yesterday as traders were undecided on how to play the recent changes in risk sentiment. An improvement in China’s HSBC manufacturing PMI brought gains earlier in the trading day but these soon fizzled out in the later trading sessions. Canadian retail sales came in weaker than expected, as the headline figure showed a 0.1% decline while the core figure printed a mere 0.1% uptick. Canada’s CPI reports are due today.

By Kate Curtis from Trader’s Way

246

USD

The US dollar had a mixed performance at the end of the week as risk sentiment and profit-taking played key roles in dictating currency price action. US new home sales came in stronger than expected, giving the currency a bit of support during the New York session, as the figure showed a 433K gain versus the 425K estimate. There are no reports lined up from the US economy today as banks are on a Memorial Day holiday.

EUR

The euro continued to edge lower to its counterparts despite the recent credit rating upgrades. S&P upgraded Spain’s credit rating to BBB with a stable outlook while Fitch upgraded its rating for Greece from B- to B also with a stable outlook. Elections that took place over the weekend appear to have had a negative effect on the euro, as traders are also positioning ahead of the potential ECB stimulus announcement next month. Only ECB head Draghi’s speech is the major event lined up for today, but Germany is due to print its GfK consumer climate figure.

GBP

The pound showed signs of retreat towards the end of the trading week, despite the lack of data from the UK economy. There are no reports lined up from the United Kingdom today, as banks are closed in observance of Spring Bank Holiday, which suggests that the pound might be in for a bit of consolidation or further weakness.

CHF

The franc put up a good fight but eventually gave way to dollar strength on Friday, as there were no reports to give it any support. There are still no reports due today so the franc could continue to edge lower to its counterparts or be stuck in consolidation.

JPY

The yen was off to a turbulent start this week as pair spiked higher then eventually resumed their selloff. Minutes of Japan’s latest monetary policy meeting appear to have caused the sudden surge in volatility, although the report showed no major changes to policy biases. There are no other reports lined up from Japan today, leaving yen pairs mostly at the mercy of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls remained under selling pressure, with the exception of the Canadian dollar which was supported by CPI gains. The headline CPI showed a 0.3% increase while the core CPI printed a 0.2% rise. There are no reports lined up from Australia, New Zealand and Canada today.

By Kate Curtis from Trader’s Way

247

USD

The US dollar showed signs of weakness at the start of the week, as the absence of US traders who were on a Memorial Day holiday left the dollar with very little support. There were no reports released from the US economy then as banks were also closed for the holiday. Durable goods orders data are due today, with the headline figure likely to show a 0.5% decline and the core figure set to print a 0.2% uptick. The previous month’s readings were revised higher though so this should provide a bit of backing for the U.S. currency unless the actual figures come up short.

EUR

The euro recovered in recent trading despite the recent election results showing a landslide victory among EU critics. For many, this led to hopes that better reforms could be implemented when it comes to tackling the economic slowdown and government budget problems. GfK German consumer climate data showed the expected 8.5 reading, which revealed no change in sentiment. For today, there are no reports due from the euro zone but ECB head Draghi has a testimony scheduled.

GBP

The pound bounced back to action despite the lower liquidity with UK traders off on Spring Day holiday. There were no reports released from the UK then and only the BBA mortgage approvals report is up for release today. Lower mortgage approvals of 45.2K are eyed versus the previous 45.9K figure, which might lead the pound to return some of its recent wins.

CHF

The franc took advantage of dollar weakness in recent trading but it appears that the rally was merely a retracement. Swiss trade balance is due today and it might show a bigger surplus of 2.43 million CHF from the previous 2.05 million CHF, which might lend more support for the franc.

JPY

The yen lost ground to its counterparts as risk sentiment picked up and traders started pricing in the possibility of seeing weak data from Japan later on this week. Take note that this will be the first set of reports which include the impact of the April sales tax hike so declines are expected. For now though, Japan’s economic calendar is empty.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained composure in recent trading sessions as risk sentiment improved. There were no reports released from the comdoll economies yesterday and none are due today, suggesting that more risk-based moves might be seen.

By Kate Curtis from Trader’s Way

248

USD

The return of US traders from their Memorial Day holiday lent support to the dollar, along with stronger than expected headline durable goods orders data. The report showed a 0.8% increase in orders while the core version printed a mere 0.1% uptick. Traders might be positioning ahead of tomorrow’s preliminary GDP release, which could show a downward revision and an economic contraction, as there are no major reports due from the US economy today.

EUR

The euro lost ground to the dollar again as Draghi reiterated the potential of further easing if inflationary pressures remain weak. There were no actual reports released from the euro zone then. For today, French consumer spending and German employment change figures are due. Retail sales could rise by 0.5% in euro zone’s second largest economy while its largest economy might print a 14K drop in joblessness. Weaker than expected data might lead to further losses for the euro.

GBP

The pound gave up most of its recent gains when London traders returned from their Spring Day holiday. BBA mortgage approvals were weaker than expected at 42.2K versus the estimated 45.5K figure and the previous 45.9K reading. Only the CBI realized sales report is due today and it might show an improvement from 30 to 36, enough to give the pound a bit of support.

CHF

The franc caved to dollar strength again as Swiss reports simply came in line with expectations. The trade balance showed a surplus of 2.43 billion CHF, although the previous month’s figure was revised down to 2.00 billion CHF. The employment level held steady at 4.19 million, a bit off the estimated 4.21 million reading. Swiss first quarter GDP and UBS consumption indicator are due today, with the growth figure likely to show a 0.6% uptick and consumption to show a small improvement.

JPY

The yen took advantage of the run in risk aversion recently, as it regained ground against most of its counterparts. Talks of an exit strategy from the BOJ’s stimulus program also added support to the yen. However, traders quickly exited their yen longs as they started pricing in declines for this week’s set of data, which includes the April sales tax hike effect.

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to hold on to their current levels when risk aversion revisited the markets yesterday. Australia’s MI leading index showed a 0.5% decline while the ANZ business confidence index in New Zealand showed a large drop from 64.8 to 53.5. Australia’s HIA new home sales and private capital expenditure are the only reports lined up for the next few hours.

By Kate Curtis from Trader’s Way

249

USD

The US dollar dominated against its major forex counterparts in recent trading, as US bond yields renewed demand for the currency. There were no reports released from the US economy yesterday while today has the revised GDP reading, initial jobless claims, and pending home sales data on tap. The Q1 GDP figure could see a downward revision from 0.1% to -0.6%, which could be negative for the US dollar. Initial jobless claims might dip from 326K to 321K while pending home sales could chalk up a 1.1% gain.

EUR

The euro fell to its major counterparts when data from Germany and France missed expectations. French consumer spending slipped by 0.3% instead of gaining by the estimated 0.5% figure while Germany showed a 24K rise in joblessness instead of the 14K projected decline. Euro zone economies are on holiday today which means thinner liquidity and possibly higher volatility in today’s London trading session. There are no major reports up for release from the region.

GBP

The pound made a strong break below a significant support area against the dollar, signaling that longer-term losses might be in the cards. UK CBI realized sales slipped from 30 to 16 instead of improving to the forecast at 36. Only the GfK consumer confidence index in the UK is due today and a small improvement from -3 to -2 is eyed, reflecting a lower degree of pessimism, but a weaker than expected result might lead to a deeper pound selloff.

CHF

The franc struggled to hold on to its recent gains and managed to reduce its losses despite the weaker than expected Swiss GDP reading for the first quarter. The economy grew by 0.5% instead of the estimated 0.6% reading, but this was still stronger compared to the previous 0.2% GDP figure. There are no reports due from Switzerland today as Swiss banks are on holiday.

JPY

The yen continued to gain ground against its counterparts on the heels of BOJ optimism, but gave up some wins when the retail sales figure showed a 4.4% decline. Take note that this includes the April sales tax hike effect and that markets are expecting further weakness in the upcoming reports. Household spending, CPI, industrial production, and the jobless rate are due in tomorrow’s early Asian trading session.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi was a big loser in recent trading as NZD/USD broke below a key support level. Fonterra announced that it would reduce payouts to producers and estimated lower milk prices in the coming months, possibly enough for the RBNZ to downgrade its growth and inflation forecasts and rethink its hawkish stance. In Canada, the current account reading is up for release but traders might sit on their hands ahead of tomorrow’s GDP report. Australia reported a 4.2% decline in quarterly private capital expenditure, worse than the estimated 1.6% drop.

By Kate Curtis from Trader’s Way

250

USD

The US dollar continued to advance against most of its major currency counterparts in recent trading as risk aversion haunted the financial markets. However, weak data from the US economy led to a bit of a selloff, as the GDP reading was revised down from 0.1% to show a 1.0% economic contraction. Initial jobless claims were better than expected but pending home sales were weak. For today, data on personal spending and income, core PCE price index, revised consumer sentiment, and Chicago PMI are due. Another round of weak figures could lead to a deeper dollar selloff.

EUR

Euro bears ganged up on the shared currency in recent trading sessions, despite the absence of most London session traders who were on an Ascension Day holiday. There were no reports released from the euro zone then while today has German retail sales on tap. Given that jobs data in the euro zone’s largest economy was much weaker than expected, consumer spending reports might also show weak figures. Analysts expect to see a 0.4% uptick to follow the previous month’s 0.7% decline.

GBP

The pound made a bit of a recovery but was unable to hold on to most of its recent gains. There were no reports released from the UK yesterday, suggesting that the bounce was due to profit-taking, and there are no reports due today. Pound pairs might consolidate or keep weakening in light of the change in BOE rhetoric to a less hawkish bias.

CHF

The franc slid lower to the dollar in recent trading, as Swiss traders took off on a holiday yesterday. The KOF economic barometer is up for release today and a small improvement from 102.04 to 102.05 is eyed. Weaker than expected data could lead to more losses for the franc while a strong rebound could lead to a rally.

JPY

The yen gave up some of its recent gains when most reports from Japan showed weakness due to the sales tax hike. Household spending and retail sales were both much weaker than expected while core CPI surged to a record high level of 3.2%. However, these are just knee-jerk reactions to the sales tax hike and the data could level off in the next few months.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a bit of recovery in the past few trading hours, possibly due to profit-taking ahead of the weekend and end of the month. There were no major reports from both Australia and New Zealand, but Canada has its monthly GDP reading on tap. A 0.1% growth figure is eyed, which might be enough to lead to a 1.7% quarterly growth. Strong figures could add support to the Loonie in the next few days.

By Kate Curtis from Trader’s Way

251

USD

The dollar continued its dominance on Friday as risk aversion stayed in the financial markets. Small bounces among major forex pairs were seen towards the end of the US session, as traders booked profits ahead of this week’s top-tier events and central bank statements. As for the US economy, data was mixed on Friday as personal spending slipped by 0.1% but personal income showed a 0.3% uptick. Chicago PMI was stronger than expected at 65.5 while consumer sentiment was revised down to 81.9. For today, US ISM manufacturing PMI is up for release and an improvement from 54.9 to 55.7 is expected.

EUR

The euro sold off to most of its major counterparts on Friday as traders started pricing in the possibility of seeing further easing form the ECB this week. Data from the euro zone was very weak, with Germany reporting a 0.9% decline in retail sales. Spanish flash CPI was weaker than expected at 0.2% while Italy’s CPI showed a 0.1% decline in price levels. This ups the odds for a weaker euro zone CPI forecast, which might be enough for traders to price in QE from the ECB on Thursday’s announcement.

GBP

The pound was still weak to the dollar but did show some signs of a rebound. There were no reports released from the UK on Friday, which explains why the currency was unable to draw much support. Net lending to individuals and mortgage approvals are up for release today and weak figures might lead to more pound selling ahead of the BOE rate statement later this week.

CHF

The franc showed signs of a recovery on Friday, mostly because traders booked profits at the end of the month. Switzerland’s economic data was actually weak, as the KOF economic barometer showed a decline to 99.79 while the previous period’s reading was downgraded to 101.81. SVME PMI is due today and a small dip from 55.8 to 55.7 is eyed, but a weaker reading might lead to more franc losses.

JPY

The yen sold off to most of its counterparts on Friday, as traders digested the weakness shown by the recent Japanese data incorporating the effect of the April sales tax hike. The rise in inflation was promising but traders though that the impact on spending might be short-lived, leading to a bit of support for the yen at the end of the day. Capital spending was stronger than expected. There are no other reports due from Japan today, which suggests that yen pairs might be sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

Performance of the comdolls was mixed on Friday, as the Loonie and Kiwi weakened while the Aussie rallied. Data from Canada was weaker than expected, as the GDP report showed quarterly growth of only 1.2% while the previous quarter’s GDP reading was revised lower. Australia’s building approvals report showed weakness earlier today, undoing some of the Aussie’s recent gains. Trading among these pairs might be quiet today, with no other reports on tap and with traders gearing up for the RBA statement and Australian retail sales release tomorrow.

By Kate Curtis from Trader’s Way

252

USD

The US dollar had a very strong start to the trading week, as it raked in gains against the euro, Loonie, and yen. The US ISM manufacturing PMI showed a decent improvement from 54.9 to 55.4, slightly lower than the consensus at 55.7 but still a positive reading. There are no top-tier reports due from the US today, as only medium-tier ones like the factory orders data and total vehicle sales report are up for release. With that, the Greenback might move to the tune of risk sentiment for the rest of the trading day.

EUR

The euro sank lower against its forex counterparts when the German preliminary CPI reading fell short of expectations and hinted of weaker than expected euro zone CPI forecasts. The reading showed a 0.1% downtick versus the estimated 0.1% gain, following the previous 0.2% decline. Other euro zone reports, such as the Italian manufacturing PMI, also disappointed while the Spanish and region-wide PMI simply came in line with expectations. Euro zone CPI forecasts are due today and a downgrade from 0.7% could seal the deal for further ECB easing later on this week.

GBP

The pound put up a strong fight to the dollar in recent trading when the UK manufacturing PMI was able to come in line with expectations. The figure slipped from 57.3 to 57.0, indicating that the expansion in the industry slowed down. For today, construction PMI is due and might show a climb from 60.8 to 61.2. In this case, the pound might be able to go for more gains.

CHF

The franc gave up its recent gains to the dollar when the SVME PMI turned out to be a disappointment. The figure was expected to dip from 55.8 to 55.7 but it fell to 52.5 instead, reflecting a sudden drop in industry activity. There are no major reports lined up from Switzerland today but traders might keep selling the franc on the heels of the slowdown in manufacturing.

JPY

The yen lost a lot of ground to its forex counterparts in recent trading as risk appetite picked up. The Nikkei recorded a 2.07% gain for the day, reflecting optimism that capital spending might make up for the slack in retail sales and household spending. There are no reports due from Japan today so the yen might continue to give way to risk appetite.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was a big loser in the recent trading sessions as building approvals showed a weaker than expected reading and led traders to believe that the RBA might sound dovish in today’s rate statement. Earlier today, retail sales came in worse than expected at only 0.2% versus the estimated 0.3% gain. Chinese non-manufacturing PMI showed an improvement though, helping limit the Aussie’s losses. As for the Loonie and Kiwi, there are no major reports due from Canada and New Zealand, leaving these currencies at the mercy of market sentiment.

By Kate Curtis from Trader’s Way

253

USD

The US dollar took a quick break from its strong rallies as risk appetite picked up in recent forex trading sessions. Data from the US economy was relatively better, as factory orders showed a 0.7% increase and saw an upward revision in the previous month’s reading. Total vehicle sales came in at 16.8 million versus the estimated 16.0 million reading. For today, US trade balance and ISM non-manufacturing PMI are up for release. The trade deficit could widen from 40.4 billion USD to 40.8 billion USD while the PMI is slated to climb from 55.2 to 55.6.

EUR

Despite the downgrade in inflation forecasts, the euro managed to put up a good fight to the dollar and score wins to the yen as the employment reading came in better than expected. CPI forecasts were dropped from 0.7% to 0.5% while the unemployment rate improved from 11.8% to 11.7%. Spanish and Italian services PMI are up for release today and these might not have such a huge impact on euro movement as traders are awaiting the ECB rate statement tomorrow.

GBP

The pound showed weakness when the construction PMI fell short of expectations and dropped from 60.8 to 60.0 instead of improving to 61.2. For today, the services PMI is up for release and this would have a bigger impact on pound movement since the sector comprises a huge chunk of overall economic activity. A dip from 58.7 to 58.3 is expected and this might lead to pound weakness all over again.

CHF

The franc was a little more steady in recent trading, despite the lack of top-tier data from Switzerland yesterday. There are still no reports due from the country today so it might be more sideways movement from franc pairs, unless there are any major changes in risk sentiment.

JPY

The yen fell victim to the strong improvement in market sentiment recently as it lost ground to its major counterparts. The Nikkei managed to chalk up a pretty decent gain for the day, along with other Asian equities. There have been no reports released from Japan then and none are due today, which suggests that yen pairs might keep moving to the tune of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance in recent trading as the Kiwi continued its descent while the Aussie had a chance to bounce on a relatively upbeat RBA rate statement. The central bank made no changes to monetary policy but gave a more positive outlook for Australia, even though the latest retail sales release came in weak. The Loonie should take center stage today with the BOC interest rate decision, although no actual changes are expected again.

By Kate Curtis from Trader’s Way

254

USD

The US dollar advanced against its major forex counterparts again when risk aversion popped back in the financial markets. Data from the US economy was mostly stronger than expected, with the ISM non-manufacturing PMI climbing from 55.2 to 56.3. Revised non-farm productivity and unit labor costs also showed better than expected results. However, the ADP non-farm employment change missed expectations, leading some to expect a weak NFP reading for Friday. For today, only the initial jobless claims report is due and it might show a higher figure of 309K versus the previous 300K.

EUR

The euro sank again in recent trading when traders started pricing in expectations of further easing from the ECB in today’s interest rate decision. Euro zone data was mostly in line with expectations, with only the Spanish services PMI printing weaker than expected results. For today, German factory orders are also up for release and it might show a 1.3% rebound. However, this could be overshadowed by the ECB event during which Draghi might announce negative deposit rates or further LTRO.

GBP

The pound struggled to hold steady in recent trading when services PMI came in better than expected at 58.6 versus the estimated 58.3 reading. However, this is a small decline compared to the previous 58.7 figure. For today, the BOE interest rate decision might spark a lot of volatility for pound pairs, although Carney and his men are likely to keep monetary policy unchanged for the time being.

CHF

The franc bounced back and forth in recent trading, as the lack of top-tier data from Switzerland kept the currency in range. There are still no reports due from Switzerland today but bear in mind that the franc tends to react the same way as the euro when there are top-tier events in the euro zone. With that, the ECB rate statement might also lead to franc weakness if the central bank decides to ease.

JPY

The yen put up a good fight to its major forex counterparts, despite the lack of data from Japan yesterday. There are no major reports lined up from the country today, which suggests that yen pairs might be sensitive to risk sentiment and country-specific events.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar edged higher in recent trading when the GDP release showed a stronger than expected 1.1% growth versus the estimated 0.9% uptick. The New Zealand dollar also recovered off its recent lows but maintained its downtrend. As for the Canadian dollar, it lost ground on the heels of a dovish BOC statement, as Governor Carney spoke of weak inflationary pressures. Australian trade balance and Ivey PMI are the main event risks for the Aussie and Loonie today.

By Kate Curtis from Trader’s Way

255

USD

The US dollar had a mixed performance as it had a volatile day against the euro but managed to make some corrections in its movement against the rest of the major currencies. Perhaps the dollar was acting merely as a counter currency in the latest trading sessions, as traders awaited the release of the NFP report today. Weaker gains in hiring are expected, as the economy probably added 214K jobs in May. The jobless rate is expected to tick higher from 6.3% to 6.4%, but this might mostly be a result of an improvement in the participation rate. Weak surface data could undermine dollar strength in the short-term but could eventually lead to a steady rise if the underlying data shows green shoots.

EUR

The euro had a very volatile trading day as it sold off initially on the ECB announcement of a rate cut, negative deposit rates, and new LTRO. Draghi even mentioned that the central bank is ready to ease further and that they are not done with stimulating the economy. Later on though, profit-taking ensued and pushed the euro back to its levels prior to the ECB statement or higher. Traders could be pricing in improvements in future euro zone data but it is likely that the longer-term downtrend on the euro might resume sooner or later.

GBP

The pound made a quick bounce in recent trading as European traders probably moved their money from the euro to the pound. There were no monetary policy changes announced during the BOE rate decision, as Carney mentioned that the UK economy is moving closer to the point where interest rates could be increased. UK consumer inflation expectations and trade balance are up for release today and upbeat figures could renew pound strength.

CHF

The franc also had a volatile trading day similar to the euro, as traders recalled that the SNB might also take action if the ECB announces easing measures. Recall that the SNB wants to defend its EUR/CHF floor and the ECB’s decision to implement further easing might force the SNB’s hand. Data on Swiss foreign currency reserves and CPI are due today.

JPY

The yen gained ground to most of its counterparts in recent trading, except for the euro which had a rocky trading day. There have been no major reports released from Japan recently and none are lined up for today, which suggests that yen movement was mostly a result of changes in market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a bit of recovery going in recent trading, as AUD/USD and NZD/USD put an end to their recent selloff. The Loonie was weaker on the day as the BOC recently emphasized their economic concerns then the Ivey PMI confirmed the ongoing weakness in the economy. The figure fell to the contractionary zone, suggesting that further signs of a slowdown in Canada might be seen. Jobs data is due today and a rebound of 24.5K is expected.

By Kate Curtis from Trader’s Way

256

USD

The US non-farm payrolls figure came in close to expectations as it posted a 217,000 gain in hiring versus the estimated 214,000 increase. The previous month’s reading was revised slightly lower from 288,000 to 282,000 yet the jobless rate managed to hold steady at 6.3% as the participation rate improved. Average hourly earnings showed a mild 0.2% uptick, better than the previous report’s flat reading. For today, there are no major reports due from the US which means that risk sentiment might be the main driver of price action.

EUR

The euro made a small retreat on Friday when German industrial production came in weaker than expected, posting a 0.2% uptick instead of the projected 0.4% rebound. Trade balance was better than expected though while French trade balance also posted stronger than estimated results. German and French banks are on holiday today with only the euro zone Sentix investor confidence report due.

GBP

The pound consolidated at the end of the week as UK trade balance came in weaker than expected while consumer inflation expectations showed a decline from 2.8% to 2.6%. Only the BRC retail sales monitor is up for release today and it is expected to show an improvement from the previous 4.2% reading, which might then lead to gains for the pound.

CHF

The franc calmed down from its recent volatile movement as Switzerland printed better than expected CPI of 0.3%. The foreign currency reserves data came in line with expectations at 444.4 billion CHF, suggesting that the SNB may still have room to defend the franc peg if needed. There are no reports due from Switzerland today as Swiss banks are on holiday.

JPY

The yen posted gains on Friday when risk appetite picked up during the Asian trading sessions. Japan’s leading indicators was better than expected at 106.6% versus the projected 106.2% reading. Over the weekend, Japan reported mixed data, with a weaker than expected current account, a stronger than expected final GDP reading of 1.6%, and a 2.3% increase in bank lending as expected. Data on consumer confidence is up for release today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a pretty good rebound on Friday, except for the Loonie which suffered due to bleak Canadian jobs data. The headline figures were mostly in line with expectations yet underlying reports showed that most of the gains were just a result of part-time hiring. Canadian housing starts are due today while Australia and New Zealand have no reports on tap. Do stay tuned for RBA Governor Stevens’ speech later on though.

By Kate Curtis from Trader’s Way

257

USD

The US dollar regained strength against the euro and Swiss franc in yesterday’s trading sessions but it lost ground to the yen and Aussie then consolidated to the pound. There have been no major reports released from the US economy yesterday while today has the JOLTS job openings and wholesale inventories data on tap. Both of these reports aren’t expected to have a huge impact on the US dollar, which might be driven mostly by risk sentiment throughout the day.

EUR

The euro suffered another sharp selloff at the start of the week, as traders digested the longer-term impact of the recent ECB easing announcement on the shared currency. Only the Sentix investor confidence index was released from the euro zone yesterday and this showed a weaker than expected reading of 8.5 versus the estimated 13.5 figure. For today, French and Italian manufacturing production numbers are due. Weaker than expected readings could lead to more euro weakness.

GBP

The pound was able to hold on to most of its recent gains as there were no reports released from the UK economy yesterday. Manufacturing production data is due today and a 0.4% uptick is expected to follow the previous 0.5% increase. A stronger than expected result might lead to more pound gains while a bleak reading could force it to return its recent wins.

CHF

The franc gave up most of its gains in recent trading as investor confidence fell sharply in the euro zone. Today, Switzerland will report its retail sales figure and possibly show a 2.2% annual reading, lower than the previous 3.0% figure. An even weaker than expected reading could lead to more franc weakness.

JPY

The yen had a mixed performance as it raked in huge gains to the euro but lost ground to the Aussie and consolidated against the Loonie. Data from Japan came in mixed over the weekend and yesterday’s consumer confidence release showed a stronger than expected result. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made decent recoveries in recent trading, with the Aussie, Kiwi, and Loonie advancing to the yen and dollar. This was spurred by positive risk sentiment and strong data from China, plus a better than expected housing starts figure from Canada. Earlier today, Australian data came in mixed as NAB business confidence held steady while home loans stayed flat. ANZ job advertisements slipped by 5.6% while the previous figure was downgraded. However, Chinese CPI came in stronger than expected and may be hinting of a pick up in the world’s second largest economy. There are no reports due from New Zealand and Canada today.

By Kate Curtis from Trader’s Way

258

USD

The US dollar dominated in recent forex trading sessions, particularly against the euro and the pound. Against the yen though, the Greenback gave up most of its recent gains. Medium-tier data from the US economy was mixed, as the JOLTS job openings data came in higher than expectations while the wholesale inventories figure was weaker than expected. Data on crude oil inventories and the Federal budget balance are up for release today, both of which aren’t expected to make a huge impact on dollar movement.

EUR

The euro resumed its selloff to the dollar and the yen in yesterday’s trading sessions, despite euro zone data printing in line with expectations. French industrial production showed a 0.3% gain while Italian industrial production marked a 0.7% increase. There are no reports due from the euro zone today, which suggests that the shared currency could be driven mostly by market sentiment.

GBP

The pound showed signs of weakness in recent trading when the U.K. manufacturing production report simply came in line with expectations of a 0.4% uptick. UK jobs data is due today, with the claimant count change likely to show a 25.0K drop in unemployment and the jobless rate expected to dip from 6.8% to 6.7%. Stronger than expected data could lead to a rebound for the pound while weak figures could push the selloff deeper.

CHF

The franc gave in further to dollar strength when Swiss retail sales came in much lower than expected. The annual reading showed a mere 0.4% uptick, much lower than the estimated 2.2% figure and the previous 3.4% gain. This goes to show that Swiss consumer spending considerably weakened in recent months. There are no reports due from Switzerland today so the franc might continue to reel from the latest bleak figures.

JPY

The yen took advantage of weak economic data from most major economies and advanced to the dollar, pound, and euro in Tuesday’s trading sessions. There have been no major reports released from Japan but the run in risk aversion was enough to boost the yen. For today, core machinery orders data is due and might show a 10.8% decline due to the recently implemented sales tax hike.

Commodity Currencies (AUD, NZD, CAD)

The comdolls stayed resilient in yesterday’s trading sessions despite risk aversion taking over most of forex price action. Strong Chinese CPI was enough to keep these currencies supported, as the promise of a pick up in the world’s second largest economy could be good for commodity exports. In Australia, Westpac consumer sentiment saw a 0.2% uptick and gave further support for the AUD. Later on, the RBNZ will announce its rate decision and a rate hike might be enough to support the potential uptrend among Kiwi pairs. No policy change, on the other hand, might push NZD lower.

By Kate Curtis from Trader’s Way

259

USD

The US dollar struggled to extend its rallies in the latest trading sessions, as data from the US economy simply came in line with expectations. Crude oil inventories showed a 2.6 million deficit while the Federal budget balance printed a 130 billion USD deficit. Price action among dollar pairs could pick up today with the US retail sales figures up for release. Headline retail sales could show a 0.5% gain while core retail sales might see a 0.4% uptick, both stronger than the previous month’s figures. Initial jobless claims and import prices data are also due today.

EUR

The euro managed to consolidate against the dollar and reduce its losses to the Japanese yen in the latest round of forex trading. There were no reports released from the euro zone then but it appears that some traders booked profits off key support levels on their euro short positions. German WPI and French CPI are due today, both of which could provide clues on whether or not inflation is likely to keep weakening in the region. Euro zone industrial production data is also due today and might show a 0.5% rebound.

GBP

The pound extended its gains to its major forex counterparts when UK jobs data came in strong. The claimant count change made a 27.4K drop in joblessness, enough to bring the UK jobless rate down from 6.8% to 6.6%. This led to speculation that the BOE might start to consider tightening monetary policy or reducing its stimulus soon, pushing the pound to new highs against most of its counterparts.

CHF

The franc kept showing signs of weakness when Swiss retail sales came in much weaker than expected the other day. There have been no reports released from Switzerland yesterday and none are due today, which suggests that traders might dump the franc because of the downturn in Swiss data.

JPY

The yen held on to its recent wins against most of the weaker currencies when Japan’s core machinery orders report printed better than expected results. Analysts were expecting to see an 11.5% decline but the actual figure was down by only 9.1% even with the sales tax hike. This goes to show that the Japanese economy could stay resilient even without BOJ stimulus.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi got a very strong boost in recent trading when the RBNZ hiked interest rates by 0.25% in their latest rate decision. Governor Wheeler went on to say that further tightening moves could be seen as the central bank attempts to keep inflation contained, which means that their rate hiking cycle is not yet over. Meanwhile, the Australian jobs report showed mixed results, with the employment change noting a decline in hiring and a downward revision in the previous month’s results and the jobless rate holding steady at 5.8% instead of rising to 5.9%. There have been no major reports released from Canada and none are due today but rising oil prices appear to be supporting the Loonie.

By Kate Curtis from Trader’s Way

260

USD

The US dollar edged slightly lower in recent trading sessions as US retail sales data disappointed. The headline figure showed a 0.3% uptick versus the estimated 0.5% gain while the core version of the report showed a 0.1% increase instead of the projected 0.4% rise. The good news though is that the previous month’s readings enjoyed small upward revisions. US PPI and preliminary UoM consumer sentiment data are due today and another set of weak figures might keep the dollar weak until the end of the trading day.

EUR

The euro struggled to pause from its sharp selloff to the dollar as medium-tier data from the euro zone came in weaker than expected. Germany reported a 0.1% decline in its wholesale price index while France showed a flat reading for its CPI, reminding market watchers that deflation is a very real threat in the region. French final non-farm payrolls and German final CPI are due today, with downward revisions likely to result in euro weakness.

GBP

The pound staged a strong rally against all of its major forex counterparts when BOE Governor Carney stated that the UK central bank might hike interest rates earlier than markets expect. He noted that house price inflation might force the central bank to tighten earlier even if there’s considerable slack in the economy. Only the UK CB leading index is due today and this might not have such a huge impact on pound action.

CHF

The franc continued to lose ground to its forex trading rivals despite the lack of data from Switzerland. It appears that euro weakness is also dragging the franc lower to its counterparts. There are still no reports due from Switzerland today so the franc might keep following the euro’s footsteps or might be sensitive to risk sentiment.

JPY

The yen had a mixed performance as it simply reacted to currency-specific events. It lost ground to the Kiwi and pound but was able to advance against the Aussie and euro. There have been no major reports released from Japan yesterday as traders are gearing up for today’s BOJ interest rate decision. No monetary policy changes are expected but it will be interesting to see how the central bank reacts to the latest set of economic reports. Optimistic remarks could keep driving the yen higher.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance, with the Kiwi being the strongest among the group. After all, the RBNZ just hiked interest rates again and hinted that they’re not done with tightening. The Australian dollar suffered a brief selloff thanks to weak jobs data while the Loonie put up a good fight. Chinese industrial production and retail sales reports are due today and these might have a strong impact on market sentiment and comdoll trading.

By Kate Curtis from Trader’s Way

261

USD

The US dollar regained ground against most of its trading counterparts when most economic reports came in stronger than expected. The Empire State manufacturing index improved from 19.0 to 19.3 instead of dipping to the estimated 15.2 reading. Industrial production came in line with expectations of a 0.6% increase while capacity utilization data showed stronger than expected results. US CPI and housing starts data are due today and another round of good figures might extend the Greenback’s rally.

EUR

The euro paused from its recent recovery as it stalled below the 1.3600 mark to the dollar. Euro zone headline and core CPI came in line with expectations of 0.5% and 0.7% gains respectively. German and euro zone ZEW figures are up for release today and considerable improvements are expected, although this might set the stage up for disappointment. Weaker than expected figures could remind traders that the ECB is still ready to ease further and push the euro back in selloff mode.

GBP

The pound rallied against most of its counterparts, driven by positive CPI expectations for today’s release. There have been no reports released yesterday but it appears that traders are already bracing themselves for good UK data this week. CPI could slide from 1.8% to 1.7%, but the housing price inflation figures might draw more attention as strong gains could reinforce Carney’s view that rate hikes might take place earlier than expected.

CHF

The franc continued to show signs of weakness, as some market participants are already starting to place their bets for the SNB rate decision later on in the week. Swiss PPI data is due today and a flat reading is expected to follow the previous 0.3% decline. A weaker than expected reading could convince more traders that SNB easing is needed to ward off deflationary pressures.

JPY

The Japanese yen lost ground to some of its trading rivals as risk sentiment turned positive recently. There have been no reports released from Japan yesterday and none are due today, but the upcoming BOJ monetary policy meeting minutes in the next Asian trading session could renew yen strength if they show confidence in the economy.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar gave up a lot of ground when the RBA meeting minutes turned out dovish, indicating that policy might stay accommodative. This dashed hopes of a rate hike for the RBA this year. The Kiwi also followed suit, although the selloff was weaker since the RBNZ is more inclined to hike rates again. Canadian foreign securities purchases data was stronger than expected, providing some support for the Loonie. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way