Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
262

USD

The Greenback traded mostly higher than its major forex counterparts, despite mixed data from the US economy. Building permits and housing starts posted weaker than expected results while CPI figures were better than expected. Headline CPI saw a 0.4% uptick while core CPI showed a 0.3% gain. For today, the FOMC interest rate decision will be the biggest mover for the US dollar. Yellen is expected to maintain the taper pace and announce the projections for growth and inflation. Hawkish remarks could lend support to the dollar while dovish comments could lead to a selloff.

EUR

The euro seemed immune to terrible economic data, as it barely sold off even with the bleak German ZEW reading. The figure slipped from 33.1 to 29.8 instead of improving to 35.2 while the euro zone ZEW did show an improvement but fell short of the estimated reading. There are no major reports lined up from the euro zone today so euro pairs might be in for a bit of sideways movement.

GBP

The pound is set to take center stage once more with the BOE monetary policy meeting minutes release. Yesterday’s CPI figures fell short of consensus but weren’t enough to derail the pound’s rallies. The headline figure slipped from 1.8% to 1.5%, indicating that the BOE probably shouldn’t tighten monetary policy just yet. However, more concerns raised on house price inflation in today’s minutes release might continue to drive rate hike expectations.

CHF

The franc struggled to hold steady in recent trading, with traders starting to place their bets on easing or intervention for the upcoming SNB rate decision. Swiss PPI came in better than expected with a 0.1% uptick instead of the estimated flat reading. Today, the Swiss ZEW is up for release and a stronger than expected report might reduce easing expectations.

JPY

The yen continued to weaken against its forex counterparts when the BOJ minutes revealed that policymakers thought the moderate recovery in the Japanese economy is likely to carry on. This sparked gains for the Nikkei and a pickup in risk sentiment. However, the board also cautioned about the downside risks to recovery particularly in emerging economies and commodity markets. There are no reports due from Japan today.

AUD

The Australian dollar lost a lot of ground in yesterday’s trading as the RBA minutes turned dovish. RBA Governor Stevens emphasized the need to keep monetary policy accommodative and that the Australian dollar is still high in historical standards. Earlier today, Australia’s CB leading index marked a 0.1% decline, lending more weakness to the Aussie. Canadian wholesale sales and NZ GDP are due later today.

By Kate Curtis from Trader’s Way

263

USD

The US dollar gave up a lot of ground in recent trading as the FOMC statement wasn’t as hawkish as many expected. In fact, the Fed even had a slightly dovish tone as policymakers announced downgraded GDP forecasts for 2014. While the FOMC expects employment and inflation to improve, they also agreed to keep interest rates low for a considerable time. Yellen did not give any time frame on when the Fed might start tightening, leading to another wave of dollar weakness. For today, initial jobless claims and Philly Fed index are up for release.

EUR

The euro made a bit of a recovery against the dollar yesterday, as there were no major reports released from the euro zone. There are still no major reports lined up from the region today, as the shared currency could react to the SNB interest rate decision later on.

GBP

The pound had a volatile trading day, with the BOE meeting minutes setting the tone for future monetary policy expectations. The minutes revealed that policymakers are looking to hike interest rates within the year, but it appears that markets have already priced in this possibility and were hoping to hear more hawkish remarks from the central bank. UK retail sales are up for release today and a 0.5% decline is expected to follow the previous 1.3% increase.

CHF

The franc is in for some action in today’s trading sessions, with the SNB set to announce its rate statement. Recall that SNB head Thomas Jordan previously said that they might ease if the ECB decides to cut rates. After all, they are intent on keeping the franc weak and holding on to the EUR/CHF peg. Jawboning or actual intervention might also be a possibility.

JPY

The yen gave up a bit of ground when risk appetite surged in the late trading sessions, as the FOMC’s pledge to keep interest rates low drove equities to new highs. There have been no reports released from the Japanese economy then and none are due today, which suggests that the yen might keep moving to the tune of risk sentiment for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

Despite the weaker than expected New Zealand GDP reading of 1.0% versus the estimated 1.2% growth, the New Zealand dollar was able to draw support from analysts’ estimates that another RBNZ rate hike will take place in July. The Australian dollar also drew support from these forecasts. Meanwhile, Canada printed stronger than expected wholesale sales, which were up by 1.2% versus the expected 0.3% uptick. No reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

264

USD

The US dollar still lacked support in recent trading sessions, as risk appetite picked up and traders are disappointed about the latest FOMC statement. Data from the US was slightly better than expected, as initial jobless claims printed a 312K figure versus the estimated 316K reading. The Philly Fed index showed an improvement from 15.4 to 17.8 instead of dipping to 14.3. There are no major reports due from the US economy today, which suggests that quiet price action might be seen unless profit-taking takes place ahead of the weekend.

EUR

The euro edged lower mostly to the franc in yesterday’s trading sessions, despite the lack of economic releases from the region. For today, German PPI is up for release and a 0.2% uptick might be seen Also due today is the euro zone current account balance, which might show a larger surplus. If actual results come in stronger than expected, the euro might have a chance at regaining a bit of ground.

GBP

The pound struggled to hold on to its gains when the UK retail sales report simply came in line with expectations of a 0.5% decline. Aside from that, the previous month’s reading was revised down from 1.3% to just 1.0%. Nevertheless, the pound stayed supported as traders are pricing in BOE rate hike expectations for this year. Only the public sector net borrowing report is due from the UK today and a higher reading than the 11.8 billion GBP consensus might be bearish for the pound.

CHF

The franc rallied after finding relief at the SNB’s decision to keep monetary policy unchanged. Many were expecting to see easing or central bank intervention in order to defend the EUR/CHF floor now that the ECB has implemented several rate cuts. The central bank kept its growth forecast unchanged and upgraded its inflation forecast for the year. Despite that, the prospect of easing or intervention is still on the table, depending on how the franc performs in the near term.

JPY

The yen gave up ground as risk appetite extended its stay in the markets. There have been no major reports released from Japan then and only BOJ Governor Kuroda’s speech is due today, which suggests that yen pairs might keep moving based on risk sentiment until the end of the week.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained ground as risk appetite picked up, despite the lack of major data from the comdoll economies. Only the Canadian CPI figures are due today, along with its retail sales reports. Core CPI could increase by another 0.2% while headline CPI could also post a 0.2% gain. Headline retail sales could show a 0.4% rebound while core retail sales could also increase by 0.4%.

By Kate Curtis from Trader’s Way

265

USD

The US dollar had a small recovery on Friday, as traders booked their post-FOMC dollar short profits. There have been no major reports from the US economy then, and only the flash manufacturing PMI and existing home sales data are due today. The manufacturing PMI is expected to dip from 56.4 to 56.1 in June while the existing home sales report might show a pickup from 4.65 million to 4.74 million. Stronger than expected data might lend more support to the dollar while bleak figures could lead the selloff to resume.

EUR

The euro still showed signs of weakening against its major forex counterparts, as the prospect of further ECB easing weighed on the shared currency. German PPI was weaker than expected, as the report showed a 0.2% drop in producer prices after the previous 0.1% decline. Meanwhile, the current account balance came in better than expected, as the surplus grew to 21.5 billion EUR versus the estimated 19.4 billion EUR. On top of that, the previous month’s reading was revised higher to 19.6 billion EUR.

GBP

The pound rebounded on Friday, as the public sector net borrowing report of the UK government came in better than expected. The deficit stood at 11.5 billion GBP instead of the estimated 11.8 billion GBP, while the previous month’s reading was revised to a better 9.0 billion GBP borrowing figure. Only the BOE credit conditions survey is due from the UK today and improvements might lead to more pound gains.

CHF

The franc seemed ready to resume its selloff on Friday, following the short-term rally spurred by the SNB inaction. There have been no reports released from Switzerland on Friday and none are due today, which suggests that the franc might be sensitive to risk sentiment for the next few trading hours.

JPY

The yen weakened towards the end of the week when BOJ Governor Kuroda admitted that the recent sales tax hike is causing fluctuations in the economy. There have been no other events in Japan last Friday but the flash manufacturing PMI released earlier today showed an improvement from 49.9 to 51.1, reflecting a return to expansion for the industry. Another speech by Kuroda is scheduled for today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls strengthened at the start of the week when Chinese manufacturing PMI came in stronger than expected, and confirmed hopes of a rebound in the world’s second largest economy. The HSBC flash figure climbed from 49.4 to 50.8 in June, outpacing the consensus at 49.7. Risk appetite has been supporting the higher-yielding comdolls so far and it appears that they might be able to hold on to their latest gains since there are no other reports lined up for the rest of the day. Earlier this week, New Zealand reported a 0.3% uptick in visitor arrivals and also added to Kiwi gains.

By Kate Curtis from Trader’s Way

266

USD

Although the US dollar had a volatile trading day, it was practically range-bound against most of its major forex counterparts. Data from the US was stronger than expected, as both the flash manufacturing PMI and existing home sales beat expectations. Flash manufacturing PMI for June climbed from 56.4 to 57.5 instead of dipping to 56.1 while existing home sales improved from 4.66M to 4.89M. US consumer confidence and new home sales data are up for release today, with similar improvements expected.

EUR

The euro suffered a brief selloff to its major forex rivals when German and French PMI readings from the manufacturing and services industries came in short of expectations. France reported deeper contractions in its manufacturing and services sectors while German showed a slower expansion. Overall, euro zone manufacturing and services PMIs showed slowdowns and suggested that the ECB might consider further easing. German Ifo business climate data is due today.

GBP

The pound made a quick bounce in recent trading despite the lack of major reports from the UK economy. The BOE inflation report hearings are scheduled for today and this might cause volatility among pound pairs, as the event could shed light on policymakers’ assessment of the economy. Hawkish remarks in support of a rate hike this year could lead to a fresh wave of rallies for the pound.

CHF

The franc lost a bit of ground in recent trading, owing mostly to weakness in euro zone data. There have been no reports released from Switzerland, yet German and French PMI readings have fallen short of expectations and led to franc selling. There are still no reports due from Switzerland today, which suggests that the franc could follow in the euro’s footsteps.

JPY

The yen continued to lose ground to higher-yielders as risk appetite picked up but still managed to end higher against the lower-yielding US dollar. There have been no reports released from Japan yesterday and none are due today, which suggests that the currency might stay sensitive to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gained ground as risk sentiment continued to improve for the trading day. The improvement in the Chinese HSBC flash manufacturing PMI has been mostly responsible for giving support to the commodity currencies, as there have been no reports released from Australia, Canada, and New Zealand so far. There are still no reports lined up from these countries for the rest of the day.

By Kate Curtis from Trader’s Way

267

USD

The US dollar had a mixed performance to its major counterparts in recent trading as it acted mostly as a counter currency. There were no major reports released from the US economy except for the CB consumer confidence and new home sales report, which both came stronger than expected. For today, durable goods orders and final GDP data are due. Recall that the US GDP had been downgraded to show a 1.0% contraction in the first quarter and a deeper contraction of 1.8% might be shown and lead to a dollar selloff.

EUR

The euro seemed immune to bleak figures, as the German Ifo business climate report came in below expectations but failed to usher in more euro weakness. The index fell from 110.4 to 109.7 instead of just dipping to 110.3. German GfK consumer climate data is due today and an improvement from 8.5 to 8.6 is eyed, although it is unlikely. Weaker than expected data could lead the euro selloff to resume.

GBP

The pound returned most of its recent gains when BOE Governor Carney didn’t sound so hawkish in the latest BOE inflation report hearings. Some officials noted that he is giving mixed signals, but the BOE head clarified that he is simply taking his cues from economic data. Lower expectations of a rate hike for this year have been priced in, but the fact remains that the BOE is considering reducing its stimulus sooner or later.

CHF

The franc was able to take advantage when higher-yielders retreated in recent trading sessions. There have been no reports released from Switzerland then and only the UBS consumption indicator is due today. An improvement from the previous 1.72 reading could lead to more franc gains while weak data could force the selloff to return.

JPY

The yen was able to advance when risk appetite pulled back in recent trading sessions but traders still seemed unimpressed with the BOJ’s monetary policy stance. There have been no reports released from Japan then and none are due today, which suggests that yen pairs could be sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls also took a turn for the worse in recent trading when risk appetite retreated. There have been no reports released from Australia, New Zealand and Canada then and none are due today, which means that sentiment could continue to dictate the movement of these higher-yielders.

By Kate Curtis from Trader’s Way

268

USD

The US dollar suffered huge losses to most of its major counterparts in recent trading, as the GDP reading was downgraded to show a 2.9% contraction. Recall that the GDP has already been downgraded from an initial positive reading to a 1.0% contraction in the latest revision. Apparently, exports had to be revised much lower and personal spending significantly downgraded because of a massive decline in healthcare spending. However, some traders brushed this report aside since it’s backward looking and doesn’t accurately reflect improvements in other sectors of the economy. Initial jobless claims, core PCE price index, and personal spending and income data are due today. Stronger than expected figures could allow the dollar to recover.

EUR

The euro advanced to the dollar but retreated against its other forex counterparts, despite the improvement in German GfK consumer climate data. The figure climbed from 8.6 to 8.9 instead of holding steady at 8.6. For today, there are no major reports lined up from the euro zone but the EU Economic Summit is going on and it would be interesting to see the updates on this event and how it could impact ECB policy and euro action.

GBP

The pound continued to correct from its recent price rallies, as it pulled back to support levels against its forex counterparts. CBI realized sales was weaker than expected as the index fell from 16 to 4 instead of improving to 25. BOE Governor Carney is set to testify again today and his remarks could carry a lot of weight in determining pound price action if he sets the record straight on what the BOE rate hike bias for the year will be.

CHF

The franc managed to score some gains against its forex counterparts as the UBS consumption indicator climbed from 1.68 to 1.77, indicating a pickup in spending. For today, there are no reports lined up from Switzerland so franc pairs might be in for consolidation.

JPY

The yen advanced to the dollar and most of its forex rivals as risk appetite slowed down in recent trading. There have been no reports released from Japan then and none are due today, suggesting that risk sentiment might continue to be the main driver of price action.

Commodity Currencies (AUD, NZD, CAD)

Comdolls recovered from their recent selloff, with NZD/USD climbing higher to the .8775 area and AUD/USD pulling back to broken support levels. There have been no reports released from the comdoll economies yesterday, which suggests that the move has been mostly a result of dollar weakness. There are still no reports due from the comdolls today, with the New Zealand trade balance due in the next Asian trading session.

By Kate Curtis from Trader’s Way

269

USD

The US dollar had a strong run on Friday, as data from the US economy came in mostly better than expected and traders booked profits off their dollar short positions. The UoM consumer sentiment reading was revised up from 81.2 to 82.5 versus expectations of an 82.2 reading. Meanwhile inflation expectations improved from 3.0% to 3.1%. For today, Chicago PMI and pending home sales are due. The PMI is expected to dip from 65.5 to 63.2 while pending home sales could see a stronger 1.4% increase compared to the previous 0.4% uptick.

EUR

The euro put up a pretty good fight on Friday, as data from the euro zone came in mostly better than expected. The German preliminary CPI showed a 0.3% rise versus the estimated 0.3% uptick while French consumer spending saw a 1.0% gain instead of the predicted 0.3% increase, while the previous reading was upgraded. Spanish flash CPI, however, fell short of expectations with its mere 0.1% uptick while German import prices stayed flat. German retail sales, euro zone money supply, private loans, and flash CPI estimates are lined up for today so the euro might be in for a volatile trading session.

GBP

The pound retreated on Friday as some traders exited their long pound positions at the end of the month and the quarter, prior to a shortened trading week this week. UK current account was weaker than expected, as the actual result showed a wider deficit of 18.5 billion GBP versus the estimated 17.1 billion GBP shortfall while the previous month’s balance was downgraded. Final GDP was unchanged at 0.8%, as expected. For today, only the net lending to individuals report is up for release from the UK.

CHF

The franc advanced to the dollar in Friday’s trading when the Swiss KOF economic barometer came in stronger than expected. The actual reading came in at 100.4 versus the estimated 100.2 figure while the previous month’s report had an upward revision to 100.1. There are no reports lined up from Switzerland today.

JPY

The yen got back on its feet last week as risk aversion took a peek back in the forex market. Stronger than expected retail sales and inflation data from Japan also added to yen support, although many are still waiting for the rest of the top-tier releases this week to assess how much damage the sales tax hike has caused. The Tankan manufacturing and non-manufacturing indices are due in the next Asian trading session and both reports are slated to show dips.

Commodity Currencies (AUD, NZD, CAD)

The Loonie continued its rally on Friday despite weaker than expected medium-tier inflation data. Raw materials saw a 0.4% decline while industrial products printed a 0.5% drop, signaling a potential downturn in consumer inflation later on. Earlier today, Australia’s new HIA new home sales report showed a 4.3% decline while New Zealand’s ANZ business confidence figure fell from 53.5 to 42.8. As for Canada, the monthly GDP figure is up for release and a 0.2% growth figure is eyed

By Kate Curtis from Trader’s Way

270

USD

The US dollar lost a lot of ground to its forex counterparts at the end of the month and quarter, despite mixed economic data. Pending home sales marked a 6.1% increase while Chicago PMI fell from 65.5 to 62.6, reflecting a weaker expansion in the manufacturing industry. US ISM manufacturing PMI is up for release today and an improvement from 55.4 to 55.6 is expected, but weaker than expected data could push the dollar lower against its counterparts.

EUR

The euro recovered in recent trading, as inflation data showed some improvement. The headline flash CPI estimate for the euro zone held steady at 0.5% while the core CPI forecast improved from 0.7% to 0.8%. German retail sales, however, was weaker than expected at -0.6% versus the estimated 0.8% increase. Italian and Spanish manufacturing PMI are up for release today and both are expected to show improvements. German unemployment change is also due today and a 9K drop in joblessness is set to follow the previous 24K drop in hiring.

GBP

The pound made another strong upside break against its forex rivals when UK net lending to individuals data came in stronger than expected. The report showed a 2.7 billion GBP reading versus the estimated 2.5 billion GBP figure and the previous 2.4 billion GBP reading. UK manufacturing PMI is up for release today and a dip from 57.0 to 56.7 is expected, but stronger than expected data could allow the pound to extend its rally.

CHF

The franc gained ground to the dollar in recent trading even though there were no reports released from Switzerland. For today, the SVME PMI is due and it might show a climb from 52.5 to 52.6, which might help give another boost to the franc. Weak data, on the other hand, could force the Swiss currency to return most of its recent wins.

JPY

The yen gave up ground to its higher-yielding forex counterparts when Japan’s Tankan reports showed weakness. The manufacturing component showed a drop from 17 to 12 while the non-manufacturing index slid from 24 to 19 as expected. Earlier today, the final manufacturing PMI release showed a small upward revision from 51.1 to 51.5 but failed to lift the yen. There are no other reports up for release from the Japanese economy for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls extended their wins to the dollar, despite relatively bleak reports from Australia, New Zealand, and Canada. The monthly Canadian GDP reading showed a 0.1% growth figure instead of the estimated 0.2% expansion. Earlier today, the Chinese official manufacturing PMI release showed a slightly better than expected 51.0 figure versus the previous 50.8 reading. The RBA rate decision is the main market mover for the Australian dollar today but no policy changes are expected. No other reports are due from the comdolls, as Canada has a bank holiday today.

By Kate Curtis from Trader’s Way

271

USD

The US dollar had another weak run in the latest trading session, as risk appetite picked up at the start of the new trading month and quarter. Data from the US economy was also weaker than expected, as the ISM manufacturing PMI fell from 55.4 to 55.3 instead of improving to the estimated 55.6 figure. Construction spending and IBD/TIPP Economic Optimism also missed expectations. US ADP non-farm employment change, factory orders, and crude oil inventories are up for release today. The bigger market-mover might be Fed Chairperson Yellen’s speech during the US trading session, as she might shed some light on the Fed’s monetary policy stance.

EUR

The euro took advantage of the run in risk appetite to gain ground against the yen and dollar. Against the Aussie and Kiwi though, the euro still caved. Data from the euro zone came in mixed, with the Spanish manufacturing PMI beating expectations and Italian manufacturing PMI coming up short. Euro zone jobless rate was better than expected at 11.6% versus the 11.7% consensus. The Spanish unemployment change report is lined up for today and might dictate direction for euro pairs.

GBP

The pound was able to extend its gains in recent trading, thanks to stronger than expected UK manufacturing PMI. The index jumped from 57.0 to 57.5 instead of falling to 56.7. Construction PMI and Nationwide HPI are due today, both of which are not slated to have a huge impact on price action. Keep your eyes peeled for another strong increase in house prices though, as the BOE is monitoring home inflation to gauge whether monetary policy needs to be tightened sooner rather than later.

CHF

The franc was able to advance against the dollar recently when the SVME PMI beat expectations and climb from 52.5 to 54.0 instead of just ticking higher to 52.6. There are no reports lined up from Switzerland today so the franc might act more like a counter currency in the next few hours.

JPY

The yen was trampled upon in the risk rallies yesterday, as the weak Tankan survey results weighed on the currency. This revived talks of potential easing from the BOJ, as both the manufacturing and non-manufacturing components reflected weakness. There are no reports due from Japan today, suggesting that the yen could be driven by market sentiment once more.

Commodity Currencies (AUD, NZD, CAD)

The comdolls extended their gains in recent trading, particularly to the lower-yielding yen and U.S. dollar. China reported improvements in its official and HSBC manufacturing PMI, which explains the pickup in risk appetite, while the RBA had a less dovish than expected statement and boosted the Australian dollar. Earlier today though, the Australian trade balance came in weaker than expected and forced the Aussie to return some of its recent wins. No other reports are due from the commodity currencies’ economies today.

By Kate Curtis from Trader’s Way

272

USD

The US dollar found its legs in yesterday’s trading session when US data came in mostly in line with expectations. The factory orders report showed a 0.5% dip while crude oil inventories showed a 3.2 million barrel shortfall. The ADP non-farm employment change report printed a better than expected 281K increase versus the estimated 207K figure and the previous 179K reading. For today, the non-farm payrolls report is up for release and it might show a drop from 217K in May to 214K in June, just enough to keep the jobless rate steady at 6.3%.

EUR

The euro gave back some of its recent gains to the dollar as the Spanish unemployment change report showed a smaller than expected 122.7K pickup in hiring versus the estimated 147.3K figure. However, this is still an improvement from the previous 111.9K reading. For today, Spanish and Italian services PMI are up for release, but the bigger market mover is the ECB rate statement. No actual policy changes are expected but market watchers will keep tabs on Draghi’s press statement, as this might give clues on next policy moves.

GBP

The pound extended its gains in recent trading when construction PMI also came in stronger than expected, following the previous day’s better than expected manufacturing PMI release. The construction index climbed from 60.0 to 62.6 instead of dipping to the projected 59.7 figure. For today, the services PMI is up for release and might also show a strong reading instead of dipping from 58.6 to 51.6 as analysts expect.

CHF

The franc returned some of its recent gains to the dollar as there were no reports released from Switzerland and data from the euro zone was weak. For today, there are still no reports due from Switzerland but the ECB rate statement could have a bigger impact on the franc’s price action today.

JPY

The yen made a bit of recovery when risk aversion peeked back in the markets, but it still gave ground to the US dollar. There have been no reports released from Japan yesterday and none are due today, which suggests that risk sentiment could be the main driver of price action among yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar erased most of its recent gains when both trade balance and retail sales came in weaker than expected. The trade deficit widened from a downgraded 0.78 billion AUD deficit in April to a 1.91 billion AUD shortfall in May, worse than the estimated 0.16 billion AUD deficit. Retail sales slumped by 0.5% instead of staying flat while the previous figure was downgraded from a 0.2% increase to a 0.1% decline. There are no reports due from New Zealand while Canada has its trade balance due.

By Kate Curtis from Trader’s Way

273

USD

Economic data from the US was mostly stronger than expected last Friday, allowing the dollar to keep rallying against its major counterparts. Headline durable goods orders marked a 0.7% gain while the core figure showed an increase of 0.8%, higher than the estimated 0.4% increase in headline durable goods orders and the projected 0.6% rise in the core figure. This also marked a considerable improvement over the flat core figure in the previous month and a recovery in the 0.9% headline decline. US flash services PMI is up for release today and might show a climb from 61.0 to 62.3. Existing home sales is also due.

EUR

The euro continued to weaken against most of its forex counterparts when the German IFO business climate report fell short of expectations. The figure slipped from 109.7 to 108.0 instead of just dipping to the estimated 109.6 reading. GfK German consumer climate made it just above expectations at 9.0 versus 8.9. M3 money supply and private loans data printed stronger than expected results but these were not enough to keep the shared currency supported. There are no reports due from the euro zone today.

GBP

The pound retreated further on Friday when the preliminary GDP figure failed to impress. The report showed a 0.8% growth figure as expected and same as the pace of expansion in the first quarter. There are no reports up for release from the UK today and the recent shift in bias for the pound might keep weighing on the currency.

CHF

The franc followed the euro and weakened to its forex counterparts last week, as there were no reports to keep the currency supported on Friday. There are still no reports up for release from Switzerland today, which suggests that the franc might take its cue from risk sentiment or euro price action.

JPY

The yen had a mixed performance on Friday, as it functioned mostly as a counter currency. It gave up some ground to the dollar but advanced to the euro, Australian dollar, and Kiwi. Inflation reports from Japan were slightly stronger than expected, with the Tokyo core CPI showing a 2.8% reading and the national core CPI showing a 3.3% gain. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a rough patch on Friday, as they mostly weakened to their counterparts. The Kiwi was weighed down by the RBNZ’s decision to pause from its rate hikes and to jawbone their currency, while the Loonie was dragged lower by the switch in BOC rhetoric earlier. There are no reports due from the comdoll economies today so it could be all about risk sentiment driving price action.

By Kate Curtis from Trader’s Way

274

USD

Data from the US economy was weaker than expected yesterday, as the flash services PMI held steady at 61.0 instead of improving to the expected 62.3 reading. Pending home sales fell by 1.1% instead of just 0.2%, erasing part of the 6.0% gain in the previous month. US CB consumer confidence and S&P/CS composite house price index are due today and small improvements are expected. However, if the actual data misses expectations, the US dollar could be forced to return some of its recent gains.

EUR

The euro fought to hold on to its current levels against the dollar as there were no major reports released from the euro zone yesterday. Only German import prices data is up for release today and it might show a 0.3% uptick from the previous flat reading. A higher than expected figure could give a small boost for the euro as it would reveal a pickup in inflationary pressures.

GBP

The pound managed a small rebound in recent trading, despite the lack of data from the United Kingdom. Net lending to individuals and mortgage approvals data are up for release today and strong data could give more fuel to the pound’s fire. Recall that housing and debt levels have been closely monitored by the UK government and the BOE so any improvements could lead to a more positive outlook and renew rate hike expectations.

CHF

The franc moved sideways to the dollar in recent trading, as there were no major reports released from Switzerland yesterday. There are still no reports up for release today, which suggests that the franc could act more as a counter currency in the next few hours.

JPY

The yen returned some of its recent wins when today’s set of releases missed expectations. Retail sales fell by 0.6% on an annualized basis, worse than the estimated 0.4% drop, while the unemployment rate climbed from 3.5% to 3.7% instead of holding steady. Household spending marked a 3.0% drop, not as bad as the projected 3.7% decline. No other reports are up for release from Japan for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls retreated once more, as there were no reports to support risk taking yesterday. News of a potential default in Argentina also weighed on market sentiment. In Australia, HIA new sales picked up by 1.2% from the previous 4.3% decline. New Zealand building consents data is up for release in the next Asian trading session.

By Kate Curtis from Trader’s Way

275

USD

The US dollar was still in rally mode yesterday as data from the US economy came in stronger than expected. The CB consumer confidence index showed a climb to 90.9, higher than the estimated 85.5 reading, while the previous report showed an upgrade from 85.2 to 86.4. Today, the US dollar could be a big mover again, as the US advanced GDP report and FOMC statement are lined up. A growth figure of 3.1% is eyed, which would be enough to erase the 2.9% contraction in the previous quarter. The FOMC is expected to continue with their taper program and possibly acknowledge the improvements in the labor sector and inflation, although there is no press conference scheduled after the event.

EUR

The euro continued to slide lower against most of its major counterparts in recent trading. Data from the euro zone was weaker than expected, as German import prices showed a mere 0.2% uptick versus the estimated 0.3% gain. German preliminary CPI is up for release today, along with Spanish flash CPI and GDP data. Strong results could allow the euro to rebound while another round of weak figures could lead to more euro weakness.

GBP

The pound retreated further to its forex counterparts, even as UK data came in slightly stronger than expected. Net lending to individuals came in as expected at 2.5 billion GBP while mortgage approvals climbed from 62K to 67K. There are no reports due from the UK today, which suggests that the pound might keep sliding or might be in for consolidation.

CHF

The franc simply followed the euro’s footsteps in recent trading, as there were no reports released from Switzerland yesterday. For today, Swiss KOF economic barometer and UBS consumption indicator are due, with improvements likely to result to support for the franc.

JPY

The yen was in for a bit of consolidation against its forex counterparts but it lost ground to the dollar. Japanese data came in mixed, with retail sales and jobs data printing weaker than expected results and household spending showing a smaller than expected decline. Preliminary industrial production came in weaker than expected earlier today as it marked a 3.3% decline versus the estimated 1.0% drop. There are no other reports up for release from Japan today.

Commodity Currencies (AUD, NZD, CAD)

New Zealand reported a 3.5% rebound in building consents for June but this was not enough to keep the Kiwi strongly supported, as news of Fonterra’s lower milk payout weighed on the currency. Canada’s underlying inflation data, namely RMPI and IPPI, are up for release today.

By Kate Curtis from Trader’s Way

276

USD

The US dollar had a strong positive reaction to better than expected advanced GDP data, which showed that the economy expanded by 4.0% in the second quarter of the year. This was much higher than the estimated 3.1% increase. However, the currency returned some of its recent gains when the FOMC made its interest rate statement and stopped short of switching to a more hawkish bias. The Fed acknowledged the pickup in hiring and inflation but made a few cautionary remarks while dissenter Charles Plosser failed to draw enough support in tweaking the forward guidance to show clearer clues on when the central bank might hike rates.

EUR

The euro had a volatile day, as it bounced around during the U.S. trading session. Data from the euro zone was mixed, as the German preliminary CPI came in higher than expected at 0.3% while the Spanish flash CPI posted a 0.3% decline instead of the estimated 0.2% uptick. Spanish flash GDP came in slightly better than expected at 0.6% versus the consensus at 0.5%. German retail sales and unemployment change, along with French consumer spending data, are up for release today but the bigger movers might be the euro zone CPI estimates.

GBP

The pound continued its slide lower as there were no reports from the UK to give it any support yesterday. Earlier today, GfK consumer confidence came in weaker than expected as it dropped from 1 to -2 instead of improving to 2. Later on, the Nationwide HPI is up for release and might show a 0.6% increase in house prices, weaker compared to the previous 1.0% gain.

CHF

The franc weakened to the dollar in recent trading, as Swiss economic data mostly came in weaker than expected. The KOF economic barometer slipped from 100.5 to 98.1 instead of improving to 101.1 while the UBS consumption indicator came in at 2.06, which was still an improvement from the previous 1.80 reading. There are no reports due from Switzerland today as the franc could take its cue from euro movement.

JPY

The yen gave up ground to most of its major counterparts after Japan’s preliminary industrial production report showed a worse than expected 3.3% decline. Average cash earnings and housing starts are due for today and another set of weak figures might lead to more yen weakness.

Commodity Currencies (AUD, NZD, CAD)

The Aussie got hit by a set of weak figures earlier in the day, as building approvals marked a 5.0% drop while import prices declined by 3.0% Canadian GDP is up for release later on and might show a 0.3% monthly economic expansion. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

277

USD

After its recent strong rallies, the US dollar paused and consolidated to most of its major counterparts. Data from the US economy was mixed, as the initial jobless claims came in line with expectations, the Chicago PMI missed expectations, and the quarterly employment cost index showed stronger than expected gains. For today, the much-awaited non-farm payrolls report is up for release. The figure is slated to come in at 231K, weaker compared to the previous 288K gain, while the jobless rate is expected to hold steady at 6.1%. Stronger than expected figures could lead to more gains for the US dollar.

EUR

The euro made a small rebound in recent trading as data from the euro zone came in mostly stronger than expected. Germany’s retail sales report showed a 1.3% gain versus the estimated 1.1% increase. The unemployment change showed a 12K drop in joblessness, better than the estimated 5K decline. French consumer spending also came in higher than expected with a 0.9% gain versus the projected 0.3% increase. The headline CPI flash estimate dropped from 0.5% to 0.4% though while the core CPI flash estimate held steady at 0.8%. Spanish and Italian PMI are up for release today.

GBP

The pound continued to edge lower to most of its major counterparts, as medium-tier data from the UK came in weaker than expected. The GfK consumer confidence report showed a drop from 1 to -2 instead of improving to 2 while the Nationwide HPI marked a mere 0.1% uptick versus the estimated 0.6% increase, weaker than the previous 1.0% gain in house prices. UK manufacturing PMI is up for release today and it might show a decline from 57.5 to 57.1.

CHF

The franc gradually weakened in recent trading, as there were no reports to give it support. It failed to take advantage of the rebound in euro zone data, as it edged lower to the dollar. Swiss banks are on holiday today so franc pairs might be in for consolidation.

JPY

The yen paused from its selloff recently, even though Japan’s average cash earnings disappointed and the housing starts showed another decline. Average cash earnings showed a mere 0.4% increase instead of the estimated 0.7% gain while housing starts showed a 9.5% decline, although this was better than the estimated 11.2% drop. Earlier today, Japan’s final manufacturing PMI showed a drop from 50.8 to 50.5. BOJ Kuroda has a testimony scheduled for today and this might cause volatility among yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls suffered another wave of selling today as Chinese PMI failed to impress. The official manufacturing PMI improved from 51.0 to 51.7 just as expected while the HSBC final manufacturing PMI was downgraded from 52.0 to 51.7. Australia’s quarterly PPI turned out to be a disappointment as it marked a 0.1% decline instead of the projected 0.7% gain. Canada, on the other hand, printed a better than expected monthly GDP reading of 0.4%. No other reports are due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader’s Way

278

USD

The US dollar edged slightly lower to its forex counterparts when the US economy printed a weaker than expected factory orders report. It showed a 10.5% gain versus the estimated 10.9% increase, although the previous month’s report was upgraded to show a 1.5% rise. Total vehicle sales was stronger than expected at 17.5M versus the projected 16.5M figure. Meanwhile, the Fed Beige Book revealed that most districts saw economic improvements in the past months. For today, Challenger job cuts and ADP non-farm employment change data are due and might provide clues on how the NFP release might turn out.

EUR

The euro recovered a bit to the dollar but edged lower to most of the higher-yielding currencies, as traders continued to price in expectations of easing or dovish remarks from ECB Governor Draghi in today’s rate statement. Data from the euro zone was mixed, with the Spanish services PMI coming in stronger than expected at 58.1 while the Italian services PMI and euro zone overall services PMI fell short of consensus. Euro zone retail sales also fell short as it printed a 0.4% decline instead of the estimated 0.3% dip. For today, the ECB statement should set the tone for euro price action both in the short-term and long-term.

GBP

The pound failed to bounce back despite stronger than expected services PMI from the UK. The report showed a climb from 59.1 to 60.5, reflecting a stronger expansion in the industry. The BOE rate decision is scheduled today and policymakers are not expected to announce any changes in interest rates or asset purchases. Any changes in the actual statement could provide clues on whether or not policymakers are becoming more optimistic about the economy, which might then dictate the pound’s direction.

CHF

The franc advanced to the dollar recently, despite the lack of data from Switzerland. There are still no reports due from the country today, which means that the franc might take its cue from euro price action or from market sentiment.

JPY

The yen had a mixed performance, as it gained ground to the pound but continued weakening against the commodity currencies. Traders are pricing in expectations of dovishness from the BOJ statement today, although profit-taking might take place before the actual event or if Kuroda doesn’t show any inclination to ease at all.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar was able to hold its ground in recent trading, as Australia reported a stronger than expected GDP reading of 0.5% versus the projected 0.4% expansion. The Loonie was also able to benefit when the BOC stuck to its neutral stance and kept monetary policy unchanged. As for the Kiwi, its gains were limited as the latest dairy auction in New Zealand turned out weaker than expected again.

By Kate Curtis from Trader’s Way

279

USD

The Greenback cashed in plenty of gains to the euro and other currencies with dovish central banks, as risk aversion peeked back in the markets yesterday. Data from the US economy was mostly stronger than expected, adding to the appeal of the dollar. The trade balance showed a smaller than expected deficit while initial jobless claims came close to estimates at 302K. Revised non-farm productivity and the ISM non-manufacturing PMI both came in stronger than expected. For today, the NFP could be crucial in setting the tone for dollar behavior, as market analysts expect to see a 226K gain in hiring versus the previous 209K figure.

EUR

The euro suffered a bloodbath in yesterday’s trading when the ECB decided to cut several interest rates again and announce their plans for purchases of asset-backed securities. The central bank pushed deposit rates deeper into the negative territory, an unprecedented move for a major central bank. Draghi mentioned that the decision was not unanimous, with some policymakers lobbying for more aggressive stimulus efforts. German industrial production and euro zone revised GDP data are due today and might not have much of an impact on the euro’s selloff.

GBP

The pound was also heavily sold off as risk aversion kicked in after the ECB easing announcement. It didn’t help that the looming possibility of Scottish independence could hurt the U.K. economy with instability and higher debt burden later on. As for the BOE, they decided to keep monetary policy unchanged for the time being. Only the consumer inflation expectations report is due today and it might not have a strong impact on pound movement.

CHF

The franc also sold off to its counterparts after the ECB decided to ease, as the possibility of currency intervention from the SNB dawned on traders. EUR/CHF has tumbled to the 1.2050 area, dangerously close to the SNB floor. Data on foreign currency reserves is due today and this might provide an idea of whether or not the Swiss central bank has room to intervene.

JPY

The yen was weaker to most of its counterparts, except for the euro and the pound, as traders also anticipated more easing from the BOJ to take place sooner or later. Their actual monetary policy statement contained no changes, although Kuroda acknowledged some signs of weakness in the economy. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls sold off to the dollar but were able to advance to the euro in recent trading, as data from Australia was mostly stronger than expected. The trade balance noted a smaller deficit while retail sales came in line with expectations of a 0.4% uptick. In Canada, the employment report is due along with the Ivey PMI, which might climb from 54.1 to 55.7.s

By Kate Curtis from Trader’s Way

280

USD

The US dollar had trouble sustaining its climb on Friday when the US NFP report came in weaker than expected. The economy added only 142K jobs in August versus the estimated 226K in hiring gains. Meanwhile, the jobless rate still managed to improve from 6.2% to 6.1% while average hourly earnings saw a 0.2% uptick as expected. There are no major reports due from the US economy for today, which suggests that market sentiment might continue to push dollar pairs around.

EUR

The euro edged lower to most of its major counterparts towards the end of the trading week, as traders adjusted positions to the ECB easing announcements. German industrial production was stronger than expected at a 1.9% gain versus the projected 0.5% uptick but the euro was barely able to gain from this release. German trade balance and euro zone Sentix investor confidence data is due today and more signs of weakness might drive the euro lower.

GBP

The pound had a sharp gap lower against its counterparts in the start of this week’s trading as the possibility of Scottish independence spelled downbeat prospects for the UK economy. Consumer inflation expectations saw an improvement from 2.6% to 2.8% but did very little to support the pound. UK Halifax HPI is due today and it might print a 0.2% uptick.

CHF

The franc lost a lot of ground recently as traders speculated about a potential currency intervention from the SNB, now that EURCHF is edging closer to its 1.2000 floor. Swiss CPI, retail sales, and jobless rate are all due today and weak data might push the franc lower. The CPI might show a 0.1% decline in prices while retail sales could improve from 3.4% to 3.7%. The jobless rate is slated to stay unchanged at 3.2% for the time being.

JPY

Yen pairs gapped down over the weekend but most gaps have been filled except for GBPJPY. Japanese current account was weaker than expected but the final GDP was unchanged at -1.8% as expected. Japan’s Economy Watchers sentiment report is due today and a downturn in confidence might be negative for the yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to extend their gains recently as most traders booked profits off their trades. New Zealand quarterly manufacturing sales slipped by 1.9% for the previous quarter, following a flat reading. Chinese trade balance was stronger than expected, giving the Aussie a bit of a boost. Meanwhile, the weaker than expected Canadian jobs release and Ivey PMI are currently weighing on the Loonie. Hiring fell by 11K instead of increasing by the estimated 10.3K while the manufacturing PMI slipped from 54.1 to 50.9. Canadian building permits is due today.

By Kate Curtis from Trader’s Way

281

USD

The US dollar continued to advance against its forex counterparts as risk aversion hit the markets and favored the lower-yielding Greenback. There were no major reports released from the US yesterday, with only the consumer credit report on tap and indicating a stronger than expected figure. For today, wholesale inventories and crude oil inventories are up for release, both of which aren’t likely to have a strong effect on the dollar.

EUR

The euro recovered against some of its currency rivals and consolidated against others. Against the dollar, the shared currency suffered massive losses once more, despite stronger than expected German trade balance. The report showed a 22.2 billion EUR surplus versus the estimated 17.3 billion EUR figure and the previous 16.4 billion EUR. However, the new set of Russian sanctions threatened to push growth for the region lower and drove the euro down. Sentix investor confidence slipped to negative territory with a -9.8 reading, indicating pessimism.

GBP

The pound continued to fall against the dollar but managed to recover against other currencies. Halifax HPI showed a mere 0.1% uptick instead of the projected 0.2% gain and another set of polls emphasized the possibility of Scottish independence, which might lead to political and economic uncertainty for the UK. UK manufacturing production and trade balance data are due today, but the bigger market-mover might be BOE Governor Carney’s speech.

CHF

The franc resumed its decline to the dollar yesterday, as Swiss data came in mixed. The jobless rate held steady at 3.2% as expected while the CPI showed a flat reading instead of the projected 0.1% decline. Retail sales was much weaker than expected at -0.6% instead of the projected 3.7% gain. There are no reports up for release from Switzerland today.

JPY

The yen gave up more ground to the dollar and most of its major counterparts recently, as data from Japan continued to disappoint. Trade balance and the Economy Watchers sentiment index both came in below expectations while the tertiary industry activity index released today showed a flat reading instead of the projected 0.3% gain. Consumer confidence and preliminary machine tool orders data are due today, along with the BOJ monetary policy minutes.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar chalked up losses to its counterparts when China’s trade balance indicated a massive decline in imports, posing negative prospects for Australia’s trade industry. Building permits in Canada surged by 11.5% but it wasn’t enough to keep the Loonie afloat against the dollar. Australia NAB business confidence dipped from 10 to 8 while home loans showed a weaker than expected increase, adding more weight to the Aussie in today’s trading. Canadian housing starts data is due in the US session.

By Kate Curtis from Trader’s Way