Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
302

USD

The US dollar regained ground last week as risk aversion dominated the financial markets, in the wake of a worsening Ebola crisis and geopolitical tensions in Hong Kong. There were no reports released from the US economy last Friday and there are no reports up for release today, as banks are on holiday. Risk sentiment might continue to drive currency price action, with the US dollar likely to stay supported unless risk appetite improves.

EUR

The euro gave up more ground to its counterparts last week, as medium-tier data from the euro zone came in mixed. French industrial production stayed flat instead of showing a 0.2% decline while Italian industrial production marked a weaker than expected 0.3% uptick versus the projected 0.6% gain. There are no major reports due from the euro zone today.

GBP

The pound was in a weak spot last Friday, with mixed economic data from the UK. The trade balance was stronger than expected at a deficit of 9.1 billion GBP instead of the projected 9.6 billion GBP shortfall. Construction output slumped by 3.9% instead of showing the projected 0.5% uptick. There are no reports due from the UK economy today.

CHF

The franc weakened to the dollar in recent trading, as there were no reports to keep the franc supported on Friday. There are still no reports up for release from Switzerland today, leaving the franc sensitive to euro zone data and risk flows.

JPY

The yen was a big winner in recent trading, even against the US dollar. Risk aversion helped support the lower-yielding currency, despite weak data from the Japanese economy. The BOJ minutes indicated that policymakers are concerned about weakening production but didn’t see the need to boost easing just yet. Tertiary industry activity marked a 0.1% decline instead of the estimated 0.2% increase. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground on risk aversion last week, although the Canadian dollar received a good boost from strong jobs data. For the month of September, Canada saw an employment gain of 74.1K and a jobless rate improvement from 7.0% to 6.8%, as full-time hiring picked up. Earlier today, China’s trade balance release came in weaker than expected at a surplus of 31.0 billion USD versus the projected 41.2 billion USD surplus, indicating weaker trade performance in the world’s second largest economy.

By Kate Curtis from Trader’s Way

303

USD

The US dollar gave back some of its recent gains again, as range-bound behavior seems to be influencing most forex pairs. US banks were on holiday yesterday, which explains the lack of trending price action. Traders are expected to return to their desks today, although data is still light from the US economy. With that, risk sentiment could continue to drive forex movements, with a risk-off environment continuing to favor the safe-haven dollar.

EUR

The euro regained ground in recent trading, as most banks were on holiday yesterday. Data from the euro zone came in line with forecasts, as the German WPI marked a 0.1% uptick as expected. The German ZEW economic sentiment figure is up for release today and it might show a drop from 6.9 to 0.2, reflecting another downturn in confidence. Euro zone industrial production data is also due today and a 1.5% drop is eyed.

GBP

The pound moved mostly sideways in yesterday’s sessions since there were no reports released from the UK economy. UK CPI could provide pound pairs more direction today, with the headline inflation reading likely to drop from 1.5% to 1.4% and the core version to show a decline from 1.9% to 1.8%. If so, this would cast more doubts on the BOE’s readiness to tighten next year and push the pound lower against its counterparts.

CHF

The franc recovered to the dollar and the euro, despite the lack of data from Switzerland yesterday. Only the Swiss PPI is due today and it might show a 0.2% rebound, enough to spur more demand for the franc and ease deflationary fears in the country. However, the franc might also be swayed by euro zone data, which could show a deeper slowdown in the region.

JPY

The yen continued to rally against its counterparts as risk aversion dominated market movements. Japanese banks were closed yesterday and there were no reports released from Japan. There are still no reports due from Japan today, leaving yen pairs sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of the US holiday and proceeded to advance against the dollar yesterday. Chinese trade balance was weaker than expected, but underlying data showed a strong improvement in both imports and exports. Earlier today, the Australian NAB business confidence figure marked a decline from 7 to 5, reflecting weaker optimism. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

304

USD

The US dollar regained footing against the pound and the euro in recent trading, despite the lack of top-tier data from the US economy. Risk sentiment provided support for the safe-haven currency, which is also starting to advance against the commodity currencies and is taking advantage of the decline in commodity prices. For today, US retail sales data is due, with the headline figure likely to post a 0.1% decline and the core reading estimated to print a 0.2% uptick. An upside surprise might lead to more demand for the US currency.

EUR

The euro suffered another wave of selling to its counterparts, as Germany showed a bleak ZEW economic sentiment figure. The reading fell from 6.9 to -3.6 instead of just dipping to 0.2, indicating that the outlook has worsened significantly. In the euro zone region, the ZEW economic sentiment reading is down from 14.2 to 4.1, lower than the projected 7.1 figure. For today, ECB Governor Draghi’s testimony might dictate euro price action.

GBP

The pound gave up its recent gains to its counterparts when the UK CPI came in much weaker than expected, casting doubts on whether the BOE can afford to tighten next year or not. The headline reading dropped from 1.5% to 1.2%, lower than the projected 1.4% figure, while the core CPI slipped from 1.9% to 1.5%. UK jobs data is up for release today and another disappointment might push pound pairs much lower. The claimant count change is projected to show a 34.2K decline while the jobless rate is slated to improve from 6.2% to 6.1%.

CHF

The franc weakened to its counterparts once more as Swiss PPI highlighted deflationary concerns in the country. The reading showed a 0.1% drop in producer prices, following the previous 0.2% decline and worse than the projected 0.3% rebound. Apart from that, weak euro zone data also weighed on the franc as the prospect of more ECB easing also ups the odds for SNB intervention or negative deposit rates. There are no reports due from Switzerland today.

JPY

The yen took advantage of the run in risk aversion recently, advancing to most of its higher-yielding counterparts. There have been no major reports released from Japan then and none are due today, leaving risk sentiment in the driver’s seat. Weak data from major economies and continued geopolitical risk could keep higher-yielding currencies weaker against the lower-yielding yen.

Commodity Currencies (AUD, NZD, CAD)

Comdolls chalked up massive losses recently, particularly the Canadian dollar which fell victim to weaker oil prices. Earlier today, the Chinese CPI report came in weaker than expected and put more pressure on the Aussie and Kiwi. The GDT index from New Zealand is up for release in the dairy auction today, with another decline likely to push the Kiwi lower. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

305

USD

The US dollar got sold off heavily in recent trading, as the US retail sales report came in weaker than expected. The headline reading showed a 0.3% decline versus the projected 0.1% dip while the core version of the report showed a 0.2% drop instead of the estimated 0.2% gain. The Empire State manufacturing index also came in weaker than expected since it slipped from 27.5 to 6.2, much lower than the projected 20.3 figure. For today, initial jobless claims and industrial production data might dictate dollar movements.

EUR

The euro managed to take advantage of dollar weakness since there were no major reports released from the euro zone yesterday. ECB Governor Draghi didn’t drop any surprises during his testimonies, keeping further losses in check for the time being. Euro zone final CPI readings are up for release today and these might show unchanged readings, although downgrades could push the euro back in selloff mode.

GBP

The pound had a volatile trading day as the jobs report printed mixed results. The claimant count change reading was much weaker than expected, as it showed a mere 18.6K pickup in hiring versus the projected 34.2K rise. The jobless rate dropped from 6.2% to 6.0%, as the number of unemployed fell below 2 million for the first time in six years. There are no reports up for release from the UK today, as traders might continue to weigh in on how the latest jobs report might affect BOE policy bias.

CHF

The franc resumed its rallies to the dollar and there were no reports released from Switzerland yesterday. Swiss SECO economic forecasts are up for release today and a downbeat outlook might force the franc to return its recent gains. Apart from that, the franc might also be extra sensitive to risk sentiment.

JPY

The yen continued to advance against most of its major counterparts, as risk aversion supported the lower-yielding currency. Industrial production was weaker than expected at -1.9% versus -1.5%, confirming BOJ policymakers’ fears that production hasn’t recovered from the sales tax hike yet. There are no reports due from Japan today, leaving yen pairs at the mercy of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to bounce back to the dollar in recent trading, as the global dairy trade price index from New Zealand marked a 1.4% rebound. Apart from that, Australia also saw some improvements in Westpac consumer sentiment and new motor vehicle sales. Canadian manufacturing sales and foreign securities purchases data are due today.

By Kate Curtis from Trader’s Way

306

USD

The US dollar was unable to regain strength in recent trading, despite better than expected data from the US economy. The initial jobless claims showed a 264K reading, lower than the estimated 286K figure and indicative of more improvements in the US labor market. Industrial production and capacity utilization data also printed stronger than expected results. US building permits and housing starts are due today, along with the preliminary UoM consumer sentiment index and a speech from Fed head Yellen.

EUR

The euro halted from its recent climb, even though the euro zone saw better than expected economic data. The trade balance beat expectations with a 15.8 billion EUR surplus versus the projected 13.5 billion EUR figure while the previous month’s reading was upgraded. There are no major events lined up in the euro zone today.

GBP

The pound regained ground recently since there were no disappointing reports released from the UK, allowing traders to book profits off their recent pound shorts. There are still no major reports due from the UK economy today, leaving pound pairs sensitive to risk sentiment.

CHF

The franc advanced further to the dollar, thanks to improving euro zone data. There were no reports released from Switzerland yesterday and none are due today, which suggests that market sentiment might be in the driver’s seat of franc price movements.

JPY

The yen gave up some ground, as USDJPY bounced off a key area of interest while other yen pairs also found support at major levels. There have been no reports released from Japan then and none are due today, with risk aversion likely to keep the lower-yielding Japanese yen supported.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were stuck mostly in consolidation to the dollar in recent trading, as the increasing global uncertainties weighed on the higher-yielders’ price action. Data from Canada was mixed, with weaker than expected manufacturing sales but better than expected foreign securities purchases. For today, Canadian CPI figures are up for release and might confirm if the downturn in price pressures also took hold on their economy.

By Kate Curtis from Trader’s Way

307

USD

The US dollar had a pretty good run on Friday as it made a small recovery to its forex counterparts. Profit-taking off the short trades took place and it remains to be seen whether the recovery would take hold or not. Data from the US was in line with expectations, as building permits and housing starts showed a 1.02M figure. The dollar gapped higher against some of its major counterparts, particularly the euro and the yen, over the weekend. There are no major reports up for release from the US economy today, leaving market sentiment in the driver’s seat.

EUR

The euro resumed its weakness to most of its counterparts towards the end of last week, as the German central bank head spoke of economic reforms. Apart from that, there were no market-movers for the euro pairs on Friday while today has only a few medium-tier reports on tap. German PPI could show a 0.1% rebound in producer price levels while the euro zone current account balance is up for release. Weaker than expected data could push the euro lower against its forex counterparts once more.

GBP

The pound struggled to hold its ground last Friday, as there were no major reports released from the UK economy. Earlier today, the Rightmove HPI marked a 2.6% gain house prices, stronger than the previous 0.9% uptick. There are no other reports up for release from the UK today, which suggests that pound pairs could also be driven by market sentiment.

CHF

The franc was no match to dollar strength on Friday, as there were no reports to keep the currency afloat then. The calendar for Switzerland is still empty for today, which suggests that the Swiss currency could take its cue from the euro or from risk sentiment.

JPY

The yen gave back some of its recent gains towards the end of last week, as traders booked profits off their short trades on the yen pairs. There were no reports released from Japan then and none are due today, suggesting that risk sentiment might be the primary driver of price action for yen pairs for today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to recover to the dollar on Friday, although the Australian dollar put up a good fight and moved mostly sideways. In Canada, inflation reports showed stronger than expected results once more, with the headline CPI showing a 0.1% gain instead of staying flat and the core CPI marking a 0.2% increase. Canadian wholesale sales are up for release today and analysts are expecting to see a 0.2% rebound, which might be enough to keep the Loonie supported.

By Kate Curtis from Trader’s Way

308

USD

The US dollar lost ground to majority of its forexcounterparts as risk appetite appeared to improve at the start of the week. There have been no major reports released from the US, although a couple of FOMC members gave testimonies. There are still no major reports due from the US today, with only the medium-tier existing home sales data on tap. The report could show an increase from 5.05 million to 5.11 million, which might be enough to keep the dollar supported. Risk sentiment could continue to play a major role in forex price action for the time being.

EUR

The euro edged slightly higher in recent trading, despite weak data from the euro zone. German PPI stayed flat instead of posting the estimated 0.1% gain in producer prices while the euro zone current account balance showed a smaller than expected 18.9 billion EUR surplus versus the projected 21.3 billion EUR surplus. For today, there are no major reports due from the euro zone, leaving euro pairs sensitive to risk appetite.

GBP

The pound was able to keep up its recent gains, even though there were no major reports released from the UK economy. The Rightmove HPI marked a 2.6% gain in house prices, stronger than the previous 0.9% uptick. UK public sector net borrowing data is up for release and the figure is slated to dip from 10.9 billion GBP to 9.3 billion GBP, which might be positive for the pound.

CHF

The franc regained ground to the dollar, despite the lack of data from Switzerland. Swiss trade balance is set for release today and a wider surplus is expected. The report could show a trade surplus of 2.43 billion CHF, up from the previous 1.33 billion CHF. Stronger than expected data could keep the franc afloat against its forex counterparts.

JPY

The yen gave back some of its recent gains as risk appetite continued to improve in the markets recently. There have been no reports released from Japan at the start of the week and there are none lined up for today, suggesting that yen pairs could continue to take their cue from risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of the pickup in risk-taking and advanced to the dollar and the yen in recent trading. Data from Canada came in line with expectations, as wholesale sales marked a 0.2% rebound from the previous 0.2% decline. In New Zealand, visitor arrivals marked a 0.9% increase after declining by 3.0% in the previous month. RBA monetary policy minutes are up for release today, along with Chinese GDP for Q3, which might be big movers for the Australian dollar and overall risk sentiment. Chinese GDP is slated to drop from 7.5% to 7.2%, which could confirm that the world’s second largest economy is slowing down. Weaker than expected data could lead to a return in risk aversion.

By Kate Curtis from Trader’s Way

309

USD

The US dollar was able to bounce back against most of its forex counterparts in recent trading sessions, as US existing home sales printed stronger than expected results and risk aversion started to creep back in the markets. Existing home sales climbed from 5.05M to 5.17M, outpacing the consensus at 5.11M. For today, US CPI reports are up for release and weak data might be seen, given the recent trend in global inflation readings. The headline CPI might print a flat reading while the core CPI could see a mere 0.2% uptick.

EUR

The euro gave back most of its recent gains to the dollar and yen, as traders continued to worry about the prospect of another recession and further ECB easing. There were no reports released from the euro zone then while today also has an empty economic schedule. With that, euro pairs might be a little more sensitive to risk sentiment.

GBP

The pound was in a weak spot recently, as traders started to price in expectations of a downbeat BOE minutes. Recall that their latest policy statement was less upbeat than usual, as policymakers cited concerns about the negative impact of a euro zone recession on the UK economy. The minutes should contain more details on their worries, which could worsen the pound’s selloff.

CHF

The franc also looked weak to the dollar in recent trading, as the currency was unable to hold on to its current gains without much support from Swiss data. The trade balance came in close to expectations, although the previous month’s reading suffered a downgrade and led to franc selling. There are no major reports lined up from Switzerland today, leaving the franc vulnerable to risk flows.

JPY

The yen was able to hold steady in recent trading, as risk aversion supported the lower-yielding currency. The Japanese all industries activity index marked a smaller than expected 0.1% dip instead of the projected 0.3% decline, although the previous figure was downgraded to -0.4%. Japan’s trade balance also came in weaker than expected today, which might keep risk-taking in check.

Commodity Currencies (AUD, CAD, NZD)

Thecomdolls drew a bit of support as Chinese GDP came in slightly better than expected at 7.3% versus the projected 7.2% growth figure. However, this is still a weaker pace of expansion compared to the previous 7.5% reading. Industrial production was stronger than expected at 8.0% versus the 7.5% forecast, lending brighter prospects for commodity exports. Australia’s CPI came in line with expectations while New Zealand is set to release its own inflation reports in the late US session. The BOC statement could move the Loonie pairs today, as a dovish announcement might push the currency much lower. Canadian retail sales are also up for release today, with the headline figure likely to print a 0.1% uptick and the core figure to show a 0.2% increase.

By Kate Curtis from Trader’s Way

310

USD

The US dollar continued to assert its dominance in the forex market, as risk aversion stayed in the markets. Data from the US economy came in mixed, with the core CPI coming in short of expectations with a 0.1% uptick instead of the projected 0.2% gain and the headline CPI beating the consensus of a flat reading and showing a 0.1% increase. US initial jobless claims and flash manufacturing PMI are due today, both of which could drive short-term dollar price action. Risk sentiment remains in the driver’s seat and continues to keep the safe-haven currencies strong.

EUR

The euro gave up more ground to the dollar in recent trading sessions, even though there were no weak reports printed from the euro zone. For today, the German and French PMI readings could determine whether or not the shared currency has a shot at recovering. However, analysts predict that the manufacturing and services sectors of these top two euro zone economies might continue to show more weakness and sharper contractions. Lower than expected results could remind traders of the looming euro zone recession and push the currency down.

GBP

The pound also weakened in recent trading when risk aversion set in. As expected, the BOE minutes indicated why policymakers appeared less hawkish than usual, as most members of the committee became more concerned about the impact of a euro zone recession on the UK economy. Two policymakers still voted to hike rates this month while the decision to keep asset purchases unchanged was unanimous. UK retail sales, BBA mortgage approvals, and CBI industrial order expectations are up for release today.

CHF

The franc took its cue from the euro and gave back its recent gains to its counterparts, as there were no major reports from Switzerland to give the franc direction yesterday. There are still no reports due from the country today so the franc could react strongly to euro zone PMI releases, with weak data likely to weigh on the Swiss currency as well.

JPY

The yen took advantage of the run in risk aversion recently, as the lower-yielding currency recovered to the euro and the pound. Japan’s flash manufacturing PMI came in stronger than expected at 52.8 versus the projected 52.1 figure and up from the previous 51.7 reading. No other reports are due from Japan, with risk sentiment likely to give yen pairs direction.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground on risk aversion, as the Loonie saw a little more volatility due to Canadian economic releases. The retail sales report churned out weaker than expected readings yet the Loonie drew support from the BOC’s decision to drop their “neutral” wording in their rate statement. This was interpreted to be a hawkish sign, although their actual statement still contained hints of caution. Earlier today, New Zealand reported a weaker than expected quarterly CPI of 0.3% versus 0.5%, causing a massive Kiwi selloff. BOC Governor Poloz is set to testify today while New Zealand will release its trade balance later on.

By Kate Curtis from Trader’s Way

311

USD

The US dollar moved sideways in recent trading, as major pairs were stuck at key levels. Data from the US was mostly weaker than expected, with the initial jobless claims showing a larger than expected 283K increase versus the projected 269K figure. The flash manufacturing PMI saw a drop to 56.2 for October while the previous reading was downgraded. US new home sales data is up for release today and it might show a decline from 504K to 473K, which might lead to a bit of dollar weakness.

EUR

The euro recovered slightly to the dollar and advanced to the yen in recent trading, as euro zone manufacturing and services PMI came in better than expected. Flash manufacturing PMI improved from 50.3 to 50.7 while the services index held steady at 52.4 instead of dipping to 52.0. In Germany, the manufacturing PMI landed back above 50.0 and reflected industry expansion while France saw more weakness in both manufacturing and services. German GfK consumer climate data is due today and this might dictate euro price action for the rest of the day. A drop from 8.6 to 8.1 is expected.

GBP

The pound was on weak footing yesterday since UK retail sales showed weaker than expected results. Consumer spending fell by 0.3% in September, worse than the estimated 0.1% dip. BBA mortgage approvals was also weaker than expected, as the reading fell from 41.4K to 39.3K. UK GDP is up for release today and another disappointment might lead to more pound weakness, as this would validate concerns that the BOE isn’t ready to tighten policy next year.

CHF

The franc moved sideways to the dollar, as there were no major reports from Switzerland. The currency did gain a bit of support from improved euro zone PMI, which was enough to keep it steady for the most part. For today, there are still no reports due from Switzerland, which suggests that euro zone data or risk sentiment could drive franc movement.

JPY

The yen lost ground as risk appetite improved in recent trading and BOJ Governor Kuroda admitted that yen weakness is helping the economy achieve its inflation target. He also mentioned that their recent review of falling energy prices suggest that inflation could fall back to 1% and that the Japanese central bank might need to implement further stimulus. There are no major reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi lost further ground in recent trading since New Zealand’s trade balance came in weaker than expected. The deficit widened from 489 million NZD to 1350 million NZD, suggesting weaker export activity. There are no reports due from the rest of the comdoll economies today, leaving the currencies sensitive to risk sentiment and potential profit-taking.

By Kate Curtis from Trader’s Way

312

USD

The US dollar gave back some of its recent gains on Friday as data from the US economy came in weaker than expected. New home sales came in at 467K, short of the 473K consensus, while the previous month’s reading was downgraded to 466K. Pending home sales data is due today and a 1.1% rebound is eyed to follow the previous month’s 1.0% decline. Weaker than expected figures might cause another round of dollar selling.

EUR

The euro made a bit of a recovery on Friday, as traders booked profits ahead of the release of the euro zone banking stress test results. As it turned out, 25 out of 123 banks failed the test, mostly in Italy. This indicates that some banks have a few months to come up with the necessary funds to cover their shortfall or else run the risk of failing if a recession takes hold. German GfK consumer climate ticked up from 8.4 to 8.5 instead of falling to 8.1, providing a bit of hope for the consumer sector in euro zone’s largest economy. German Ifo business climate is due today and a dip from 104.7 to 104.6 is expected.

GBP

The pound also made a strong bounce at the end of the week, as the preliminary UK GDP reading came in line with expectations of 0.7% growth. To top it off, the previos quarter’s reading was upgraded to show a 0.9% expansion. UK CBI realized sales is due today and it might show a drop from 31 to 29, which might be taken negatively by the pound.

CHF

The franc recovered to the dollar last week, despite the lack of top-tier data from Switzerland. There are still no reports due from the country today, leaving traders to focus mostly on euro zone data and its potential effect on the Swiss economy and SNB monetary policy. Risk sentiment might also be a key mover for the franc pairs today.

JPY

The yen lost ground on Friday, as BOJ Governor Kuroda admitted that there might be need for more easing should the economy fail to meet its inflation target. He pointed out that falling energy and commodity prices might drag overall price levels back below 1%, farther away from their 2% goal. There are no reports due from Japan today, which suggests that this shift in BOJ stance might keep pushing the yen lower.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to take advantage of dollar weakness on Friday, as AUDUSD consolidated while NZDUSD gave up more ground. There were no reports released from these economies then and there are no major ones on tap for today, indicating that risk sentiment might be the big mover for these currencies.

By Kate Curtis from Trader’s Way

313

USD

The US dollar had a mixed performance recently, as it gained ground to the yen but gave up some gains to the pound and the euro. Pending home sales was weaker than expected with a mere 0.3% uptick instead of the estimated 1.1% gain. US durable goods orders data is due today, with the headline figure expected to show a 0.4% gain following the previous 18.4% drop and the core figure likely to show a 0.5% uptick. Weaker than expected data could indicate that the US economy is starting to slow down and might lead to dollar selling.

EUR

The euro made a bit of recovery recently even as the German Ifo business climate report came in weaker than expected. The index slipped from 104.7 to 103.5, way below the estimated 104.6 reading. This indicates that business sentiment has weakened considerably in the euro zone’s largest economy. Data on German import prices is due today and might indicate if the region is in for more deflationary pressures, which might then cause euro weakness.

GBP

The pound continued its steady ascent in recent trading, as UK CBI realized sales showed an improvement. The reading held steady at 31 instead of dipping to the estimated 29 figure. There are no reports due from the UK today, which suggests that the pound might be in for a bit of consolidation.

CHF

The franc advanced to the dollar despite the lack of data from Switzerland yesterday, suggesting that the currency simply took its cue from the euro. There are still no major reports lined up from Switzerland today, which means that consolidation might be seen unless there’s a huge change in market sentiment.

JPY

The yen was still in for a bit of weakness at the start of the week, as traders priced in the odds of additional BOJ easing. Last week, BOJ Governor Kuroda said that the country might have trouble meeting its inflation target since commodity and energy prices keep falling. Earlier today, the retail sales report showed a stronger than expected 2.3% gain, enough to reassure some traders that more stimulus isn’t necessary.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued their struggle, as though awaiting more clues from market and risk sentiment. AUDUSD was still moving sideways while the Loonie gave up some of its gains to the yen and held steady to the dollar. There were no reports from the comdoll economies yesterday and none are lined up today, suggesting that market sentiment might be a major driver or that pairs could stay stuck in consolidation for the time being.

By Kate Curtis from Trader’s Way

314

USD

The US dollar gave up ground to most of its major counterparts, with the exception of the Japanese yen, in yesterday’s trading sessions. Durable goods orders data came in below expectations, with the headline figure showing a 1.3% decline and the core figure showing a 0.2% drop. Analysts expected a 0.4% and 0.5% gain respectively. The big mover for the US dollar today would be the FOMC statement, during which the Fed might give hints on when they could start hiking interest rates. Dovish remarks similar to their previous statement could drive the dollar lower.

EUR

The euro made a bit of recovery to the dollar and yen as German import prices came in stronger than expected and posted a 0.3% uptick. There are no major releases from the euro zone today, leaving euro pairs sensitive to risk sentiment and the upcoming FOMC decision.

GBP

The pound edged higher in recent trading sessions, despite the lack of top-tier data from the UK. For today, net lending to individuals and mortgage approvals data are due, which might lead to small pound moves across the charts. Risk sentiment and the FOMC statement might be more influential to pound price action today, as the announcement could affect market risk sentiment.

CHF

The franc continued to advance to the dollar in recent trading, as the Swiss currency was lifted by improving German import prices, easing deflationary concerns in the continent. There are still no reports up for release from Switzerland today, leaving franc pairs vulnerable to risk sentiment.

JPY

The yen continued to lose ground, weighed down by recent remarks from BOJ Kuroda saying that the economy might see weaker inflationary pressures and that the central bank might need to implement more stimulus. Data from Japan has actually been stronger than expected, as retail sales and preliminary industrial production both beat expectations.

Commodity Currencies (AUD, NZD, CAD)

The comdolls showed more strength in recent trading, as AUDUSD made an upside break from consolidation while USDCAD showed more downside momentum. There have been no major releases from Australia, New Zealand, and Canada so far this week but it appears that improvements in risk appetite are starting to lift the higher-yielding currencies. The RBNZ statement is coming up and more remarks on the overvalued Kiwi could spark fears of intervention and drive the currency lower.

By Kate Curtis from Trader’s Way

315

USD

The US dollar made strong rallies after the FOMC statement, as the committee sounded more hawkish compared to their previous month’s announcement. Fed officials acknowledged the strong improvements in the labor sector, changing their wording to say that the under-utilization of resources has been gradually diminishing. The Fed also decided to end its QE program as expected while maintaining their pledge to keep rates low for a considerable time after easing ends. The US advanced GDP reading is up for release today and it might show a 3.1% expansion, slower compared to the previous 4.6% growth.

EUR

The euro gave up ground to the dollar but managed to hold on to its wins to the yen. There were no major reports released from the euro zone yesterday, leaving the shared currency sensitive to other economic events. For today, German and Spanish flash CPI readings are due, along with the Spanish flash GDP reading. Stronger than expected data could keep the euro afloat while weak readings might remind traders that another recession is likely.

GBP

The pound was in a weak spot to the dollar in recent trading while consolidating to most of its other counterparts. UK data was mostly weaker than expected, as mortgage approvals and net lending to individuals fell short of consensus. For today, only the UK Nationwide HPI is up for release and a 0.4% rebound in house prices is expected.

CHF

The franc return its recent wins to the dollar when the FOMC statement indicated that the Fed might still be ready to hike rates next year. There were no reports to keep the franc supported yesterday while today has the UBS consumption indicator and KOF economic barometer on tap. Both reports are expected to show improvements which might allow the franc to recover slightly.

JPY

The yen lost ground to most of its major counterparts, spurred mostly by the strong rally for USDJPY after the Fed statement. There have been no reports released from Japan then but the divergence in policy bias for the Fed and the BOJ supports an anti-yen bias. There are still no reports lined up from Japan today, as traders might price in expectations for Friday’s major reports.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were no match to dollar strength in yesterday’s US session, as the higher-yielders returned their recent wins and more. Canada’s underlying inflation reports came in weaker than expected, casting doubts on whether the BOC can maintain its upbeat assessment or not. The RBNZ decided to keep rates on hold at 3.50% as expected while Aussie import prices marked a 0.8% quarterly decline, both resulting to weakness for their respective currencies. There are no other reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader’s Way

316

USD

The US dollar gave back some of its recent gains even though the US GDP reading was stronger than expected. The economy grew 3.5% in Q3, better than the estimated 3.1% growth figure but weaker compared to the previous 4.6% expansion. Components of the report showed that most of the gains were spurred by government spending, although there were notable improvements in export activity as well. Medium-tier data (personal spending and income, core PCE price index, and Chicago PMI) are up for release today, with strong data likely to spur more dollar gains.

EUR

The euro got hit by a wave of mixed data, as Germany showed a strong employment figure while inflation reports fell short of expectations. The German preliminary CPI marked a 0.3% decline while Spain’s flash CPI showed a 0.1% dip, reminding traders of the possibility of deflation in the euro region. The unemployment change figure came in at -22K for Germany while Spanish GDP came in line with consensus at 0.5%. For today, German and French retail sales reports are due, along with the region-wide CPI estimates. Weak data could once again spark euro weakness.

GBP

The pound bounced back in yesterday’s trading sessions even though there were no major releases from the UK economy. Nationwide HPI marked a 0.5% gain in house prices as expected. There are no reports up for release from the UK economy today, suggesting that consolidation might be seen for pound pairs or profit-taking might drive price action.

CHF

The franc was able to recover to the dollar, thanks to upbeat data from Switzerland. The KOF economic barometer showed a higher than expected reading of 99.8, up from an upgraded 99.3 figure and outpacing the 99.2 consensus. The UBS consumption indicator improved to 1.46, although the previous figure was downgraded to 1.28. There are no major reports due from Switzerland today as the franc might take its cue from euro zone data once more.

JPY

The yen continued to give up ground to its forex counterparts, as traders kept pricing in the possibility of further BOJ easing. Earlier today, Japan’s reports came in mostly in line with expectations, with the exception of the household spending report. This showed a 5.6% decline, worse than the estimated -4.0% figure and the previous -4.7% reading. Tokyo core CPI and the national core CPI both posted weaker readings compared to the previous period, confirming BOJ Governor Kuroda’s weak inflation concerns. The BOJ statement could further spark volatility for yen pairs today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls got back on their feet yesterday, after selling off during the FOMC statement the other day. New Zealand showed a 12.2% decline in building consents while Australian producer prices marked a 0.2% gain as expected. Canadian GDP is up for release later and a flat figure is eyed, which might lead to weakness for the Loonie if the actual figure comes in weak.

By Kate Curtis from Trader’s Way

317

USD

The US dollar continued its ascent until the very end of the week, particularly against the euro and the yen. Data from the US economy was mixed, with the personal spending and income figures coming short of expectations and the employment cost index and Chicago PMI beating expectations. For today, the ISM manufacturing PMI is due and it might show a dip from 56.6 to 56.5, reflecting a slightly slower pace of expansion in the industry. Strong data could add another boost for the dollar though, as it might set the tone for a strong NFP release later in the week.

EUR

The euro gave up ground to the dollar but was able to take advantage of yen weakness at the end of the week. Data from the euro zone was much weaker than expected, with Germany printing a 3.2% decline in retail sales and France marking a 0.8% drop in consumer spending. The headline CPI flash estimate for the region showed a 0.4% uptick as expected while the core CPI flash estimate fell short of estimates and posted a 0.7% gain. Spanish and Italian manufacturing PMI are up for release today and weak figures could inspire more losses for the shared currency.

GBP

The pound consolidated to the dollar and rallied to the yen on Friday, as there were no major reports released from the UK. For today, only the manufacturing PMI is up for release but this might spark a strong reaction from the currency. The reading is slated to drop from 51.6 to 51.5, reflecting a slower pace of industry expansion. However, a stronger than expected reading might lead to a bounce for the pound.

CHF

The franc simply followed the euro’s footsteps on Friday since there were no reports from Switzerland to give it direction. Unfortunately for the Swiss currency, data from the euro region came in weaker than expected and revived fears of deflation and a recession. Swiss SVME PMI is up for release today and it might show an improvement from 50.4 to 51.3, which would mean that the manufacturing industry saw a stronger expansion.

JPY

The yen gave up a lot of ground on Friday when the BOJ surprised the markets with its decision to ramp up its easing efforts. The central bank decided to expand its monetary base with higher asset purchases in order to ward off the threat of deflation in the country. BOJ Governor Kuroda also mentioned that they are gearing up for another sales tax hike, which might hurt spending and manufacturing again. Japanese banks are on holiday today, which means that there are no reports lined up, but the yen might lose further ground after this easing decision.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of yen weakness but were no match to the dollar’s strength on Friday. Canadian GDP was weaker than expected at -0.1% while Australia’s building approvals report released today showed a massive 11.0% decline. ANZ job advertisements marked a mere 0.2% uptick, setting the tone for a potential disappointment in Australia’s jobs report due later this week. Chinese non-manufacturing PMI dipped from 54.0 to 53.8, reflecting a slight slowdown in the services industry.

By Kate Curtis from Trader’s Way

318

USD

The US dollar returned some of its recent forex trading gains as traders booked profits ahead of the mid-term elections, which pose a risk to dollar trends. Economic data from the US was weaker than expected, with factory orders posting a 0.6% decline, worse than the estimated 0.4% drop. US ADP non-farm employment change and ISM non-manufacturing PMI figures are due today, both of which could allow the dollar to recover if the actual results come in strong.

EUR

The euro bounced back yesterday, despite weaker than expected Spanish employment figures. Joblessness rose by 79.2K in the euro zone’s third largest economy, weighing on employment prospects in the region. Spanish and Italian services PMI are due today, with both expected to show small improvements and possibly lead to euro gains. Euro zone retail sales is also due and might have a significant impact on euro movement.

GBP

The pound had a mixed performance, despite weaker than expected construction PMI. The figure fell from 64.2 to 61.4, worse than the estimated 63.5 figure. For today, the services PMI is up for release and it might show a dip from 58.7 to 58.5. Stronger than expected data could allow the currency to recover while weak results could lead to further declines.

CHF

The franc took advantage of dollar weakness as it was able to follow the footsteps of the euro. Swiss CPI is due today and a 0.1% decline in price levels is expected to follow the previous month’s 0.1% uptick. Other than that, risk sentiment might continue to drive franc price action.

JPY

The yen was able to make a small recovery to its counterparts as some Japanese officials declared that the currency has already weakened too much. Earlier today, Japan’s average cash earnings report came in weaker than expected, resulting to a fresh round of selling for the Japanese currency. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were able to bounce back in recent trading, despite another decline in the GDT index and a worse than expected dairy auction. The Canadian dollar was in a much weaker spot, thanks to a sharp decline in price levels spurred by Saudi Arabia’s decision to cut oil prices in the US. New Zealand employment change was stronger than expected at a 0.8% quarterly gain and a drop in the jobless rate from 5.6% to 5.4%. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

319

USD

The US dollar advanced to the pound and most of its major counterparts in recent trading, as data from the US came in mixed. The ADP non-farm employment change figure saw a 230K gain versus the estimated 214K increase while the previous month’s reading was revised higher. The ISM non-manufacturing PMI showed a lower than expected reading though, as the figure fell from 58.6 to 57.1. Despite that, traders still seem to be gearing up for an upside NFP surprise later this week. For today, initial jobless claims and preliminary non-farm productivity and labor costs data are due.

EUR

The euro revisited its previous lows to the dollar, as euro zone retail sales showed a massive 1.3% decline instead of the projected 0.6% dip. The Spanish services PMI came in slightly weaker than expected while the Italian services PMI beat expectations. For now, traders might be bracing themselves for a downbeat ECB rate statement, although no actual changes are expected. Draghi might announce the actual scope and size of their ABS purchases, which many deem to be a form of quantitative easing.

GBP

The pound lost ground to its major counterparts when the UK printed a bleak services PMI reading. The figure fell from 58.7 to 56.2, reflecting a slower pace of expansion in the industry. The BOE is set to announce its monetary policy decision today and possibly keep rates and asset purchases unchanged. There is no press conference scheduled so traders might still wait for the minutes to be released a couple of weeks from now before deciding on their pound bias.

CHF

The franc gave up a bit of ground to the dollar despite better than expected CPI data. The report showed a flat reading instead of the projected 0.1% decline, easing deflation fears for a while. SECO consumer climate data is due today and a drop from -1 to -4 is expected, which would reflect increased pessimism. Other than that, the franc might also take its cue from euro price action for today.

JPY

The yen resumed its slide to its major counterparts, as the lack of data from Japan kept the currency weak. The BOJ minutes released earlier today seemed to spark another leg higher for yen pairs, as traders were reminded of the central bank’s dovish bias and deflation concerns. No other reports are up for release from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened to the dollar once more, weighed mostly by falling commodity prices. Apart from that, the Australian dollar lost ground earlier today as the jobs report reflected weakness in the sector, which saw downward revisions in previous data. Canadian Ivey PMI is up for release today and analysts are expecting to see an improvement from 58.6 to 59.2, which might be positive for the currency.

By Kate Curtis from Trader’s Way

320

USD

Dollar traders are gearing up for the release of the October NFP report in today’s US trading session, which could show a slightly slower pace of jobs gains. However, leading indicators of employment such as the ADP non-farm employment change and labor components of ISM surveys seem to be hinting at an upside surprise. In that case, the US dollar might be able to extend its rallies to its forex counterparts as traders continue to price in an early rate hike from the Fed next year. Initial jobless claims was stronger than expected yesterday, although preliminary labor costs and non-farm productivity data missed the marks.

EUR

The euro got badly beated in yesterday’s London trading session, despite the lack of additional easing announcements from the ECB. Draghi reassured traders that the ECB is unanimous in its decision to shore up its balance sheet to 2012 levels, which might include pumping in 1 trillion EUR in the system. Apart from that, Draghi also stressed that the central bank is open to further easing in order to boost inflationary pressures. Only medium-tier reports, namely French and German industrial production, are due from the euro zone today and weak data might push the euro lower.

GBP

The pound was also in a weak spot in yesterday’s trading sessions, as the BOE seemed its usual dovish self. No interest rate changes or easing measures were announced, as traders were left waiting for the minutes of the policy meeting to be released next week before committing to their pound biases. As it is, the odds of a rate hike in early 2015 are looking slimmer as the BOE is grappling with a potential euro zone recession. Only the UK trade balance is up for release today and it might not be enough to give the pound a directional bias.

CHF

The franc took its cue from the euro and lost ground to most of its counterparts after the ECB announced its commitment to potential easing. Swiss SECO consumer climate also came in weaker than expected, as the index slipped from -1 to -11, lower than the estimated -4 figure. For today, Swiss unemployment rate, retail sales, and foreign currency reserves data are due and these might lead to more franc weakness if the actual results come up short.

JPY

The yen resumed its slide to the dollar but recovered to the euro in recent trading. Some Japanese officials are already cautioning on the potential repercussions of a very weak yen while others say that this could be positive for exports. No other reports are due from Japan today, with the yen looking at potential downside after the BOJ’s recent easing announcement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up further ground in recent trading, spurred by falling commodity prices and weak risk sentiment. It didn’t help that the recent Australian jobs report sparked more doubts on the survey methodology, as a strong headline reading still wasn’t enough to support the Aussie. In Canada, the Ivey PMI came in weaker than expected and set the tone for a weak employment release today. Chinese trade balance is up for release over the weekend this might lead to open price gaps next week.

By Kate Curtis from Trader’s Way

321

USD

The US dollar gave up ground to its forex counterparts on Friday when the US non-farm payrolls figure missed expectations. Hiring picked up by 214K when analysts were expecting to see a 235K gain, although the jobless rate improved from 5.9% to 5.8% in the same month. Underlying labor components also showed improvements, as the participation rate stabilized while the under-employment rate ticked lower. Wage growth remains a concern, as average hourly earnings marked a mere 0.1% gain instead of the expected 0.2% increase. For today, there are no major reports up for release from the US.

EUR

The euro took advantage of dollar weakness in recent trading, as data from the euro zone wasn’t all disappointing. The German industrial production figure fell short of expectations with a mere 1.4% gain instead of the estimated 2.1% rebound while the French industrial production saw a flat reading instead of the projected 0.1% decline. Italian industrial production and euro zone Sentix investor confidence data are up for release today.

GBP

The pound made a strong recovery to the dollar on Friday, even though UK data was weaker than expected. The trade deficit widened from 9.0 billion GBP to 9.8 billion GBP, suggesting a weak export performance. For today, there are no major reports up for release from the UK, which suggests that consolidation could be seen or that risk sentiment might be the main driver of price action.

CHF

The franc advanced towards the end of the week, even though Swiss retail sales turned out to be a disappointment. The report showed a mere 0.3% gain instead of the projected 2.2% increase while the previous reading was downgraded to 1.4%. Foreign currency reserves declined while the jobless rate held steady at 3.2% as expected. There are no reports due from Switzerland today.

JPY

The yen recovered to the dollar, as the US jobs report headline figures were disappointing. Japanese officials’ comments on how the weak yen might result to economic damage also forced the currency to take a break from its dive. There are no reports up for release from Japan today, leaving risk appetite in the driver’s seat.

Commodity Currencies (AUD, NZD, CAD)

The comdolls all took advantage of dollar weakness last week, as profit-taking also took place. Canada saw a stronger than expected jobs report, with a hiring gain of 43.1K in October and a jobless rate decline from 6.8% to 6.5%. Earlier today, Australia’s home loans report showed a worse than expected 0.7% drop while Chinese CPI came in line with expectations at 1.6%. The PPI was weaker than expected though, as it marked a 2.2% drop and hinted of weaker price pressures down the line.

By Kate Curtis from Trader’s Way