Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
342

USD

The US dollar returned some of its latest trading gains at the start of the week as forex traders booked profits off key levels. USDJPY retreated below the 121.00 handle while GBPUSD recovered above 1.5600. The US labor market conditions index came in at 2.9, down from the previous 3.9 reading, which was already downgraded from 4.0. This indicates that other labor components might not have seen such strong improvements as the NFP report indicated. For today, only the JOLTS job openings report and wholesale inventories are up for release.

EUR

The euro was able to make a sigh of relief against the dollar yesterday, with a bit of strength in euro zone data. The Sentix investor confidence reading improved from -11.9 to -2.5, outpacing the consensus at -9.9 and indicating that pessimism is no longer as bad as before. German and French trade balance are up for release today and these might not have such a huge impact on euro movement.

GBP

The pound was able to recover in recent trading, despite the lack of data from the UK economy. For today, the manufacturing production report is up for release and it might show a bleak 0.2% gain, lower than the previous 0.4% increase. Weaker than expected data could lead to a return of pound weakness while strong figures could lead to more gains.

CHF

The franc took advantage of dollar weakness while consolidating to the euro as usual. Data from Switzerland was mostly weaker than expected, as the CPI stayed flat while retail sales marked a smaller than expected 0.3% uptick. This was far below the estimated 0.9% annualized gain. Swiss unemployment rate is up for release today and it might print no change at 3.2%.

JPY

The yen recovered against most of its forex counterparts, thanks to profit-taking at key levels. The final GDP reading revealed that the economy contracted worse than expected at a 0.5% decline in growth versus the initially reported 0.1% drop. Preliminary machine tool orders data is due today but this might not push yen pairs around so much, with market sentiment likely to play a key role in price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to take advantage of dollar weakness, as the Aussie, Kiwi, and Loonie continued to edge lower to the Greenback. Canadian housing starts and building permits data were both weaker than expected, as the former logged in a 196K increase versus the projected 201K gain while the latter indicated a 0.7% uptick versus the projected 2.1% jump. In Australia, NAB business confidence fell from 5 to 1, reflecting a downturn in optimism. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

343

USD

The US dollar suffered a sharp selloff against the Japanese yen but managed to hold on to some of its recent wins to its forex counterparts, as risk aversion weighed on higher-yielders. The political uncertainty in Athens sparked fears of geopolitical tension, allowing traders to flock to the safe-havens. For today, the US retail sales release might have a stronger say in price action, as spending is expected to have picked up in November. After all, the Thanksgiving holiday sales were probably enough to boost retail sales, along with the strong gains in hiring for the same month.

EUR

The euro was able to recover to the dollar in yesterday’s sessions, despite the growing uncertainty in Greece. As it turns out a vote will be held in three rounds to keep the current government in place, otherwise the parliament will be dissolved and bring in more uncertainty for the country. Data from Germany was stronger than expected, as the trade balance showed a larger surplus of 20.6 billion EUR, while the French trade deficit came in line with expectations. For today, only the French industrial production report is due and it might take the backseat while markets focus on the political situation in Greece.

GBP

The pound managed to edge slightly higher and take advantage of dollar weakness, even as UK manufacturing production came in weak. The report indicated a 0.7% loss versus the projected 0.2% uptick while industrial production marked a 0.1% decline instead of the estimated 0.3% gain. For today, only the UK trade balance is due and it might show a deficit of 9.5 billion GBP, smaller than the previous 9.8 billion GBP shortfall.

CHF

The franc also took advantage of dollar weakness but remained mostly unchanged to the euro, as Switzerland’s jobs report churned out strong results. The report indicated that the jobless rate improved to 3.1% in November instead of coming in at 3.2%. For today, there are no major reports lined up from Switzerland.

JPY

The yen turned out to be a big winner yesterday as risk aversion took hold of the markets and traders sought a safe-haven alternative. There were no reports released from Japan then while today had a couple of weak readings. The PPI declined from 2.9% to 2.7%, reflecting potentially weaker price pressures, while the BSI manufacturing index slipped from 12.7 to 8.1 instead of improving to 13.7. Japanese consumer confidence is still up for release and another weak reading could put the yen back in selloff mode.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to hold on to their recent wins to the dollar as risk aversion weighed on the higher-yielders. In Australia, talks of an RBA rate cut sparked by NAB’s decline in business confidence from 5 to 1 dragged the currency lower. Earlier today, Westpac reported a 5.7% drop in consumer sentiment while China showed weaker than expected inflation reports. Annual CPI fell from 1.6% to 1.4% while the PPI marked a 2.7% year-over-year decline. Later on, the RBNZ rate statement could be a big mover for the Kiwi, as more downbeat remarks are expected.

By Kate Curtis from Trader’s Way

344

USD

The US dollar was still in a weak spot in recent trading as the recent selloff sparked more profit-taking moves. There have been no major reports released from the US economy yesterday while today has retail sales figures on tap. Headline retail sales could pick up by 0.4% in November while core retail sales might see a 0.1% uptick. Analysts are watching out for an upside surprise, as the surge in spending during the Thanksgiving sales and early shopping for the holiday season could lead to stronger gains.

EUR

The euro extended its rally to most of its counterparts, as traders found a bit of relief in the Greek political situation. Earlier in the week, talks of seeing more uncertainty in Greece, which could worsen their debt situation and lead to a euro zone exit, weighed on the shared currency. However, the knee-jerk market reaction has been faded in the past couple of days even as medium-tier data from the euro zone has been weak. German and French CPI are up for release today, along with the Italian industrial production report, and these might not have such a huge impact on euro movement.

GBP

The pound edged slightly higher in recent trading since the UK trade balance came in line with expectations. The report showed a 9.6 billion GBP deficit, smaller than the previous 9.8 billion GBP shortfall. There are no major reports due from the UK today, which suggests that pound pairs could be sensitive to risk sentiment.

CHF

The franc continued its advance to the dollar, despite the lack of major reports from Switzerland. Today could be a different story though, as the SNB is set to make its monetary policy announcement. No actual changes are expected, although Thomas Jordan is likely to reiterate their pledge to defend the franc peg.

JPY

The yen was able to take advantage of the risk-off market sentiment recently, as it rallied to the dollar and most of its counterparts. Data from Japan released earlier today came in weaker than expected, as the core machinery orders report indicated a 6.4% decline versus the projected 2.1% drop. Tertiary industry activity fell by 0.2% versus the estimated 0.1% dip. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls extended their recovery in recent trading, headed mostly by the Kiwi which benefitted from the RBNZ rate statement. Even though many were expecting to hear dovish remarks from the central bank, Wheeler’s remarks sparked a Kiwi rally when he spoke of the need to watch housing inflation. In Australia, the jobs report showed a stronger than expected 42.7K hiring gain versus the projected 15.2K increase, but the previous month’s report was downgraded significantly and brought the jobless rate up from 6.2% to 6.3%.

By Kate Curtis from Trader’s Way

345

USD

The US dollar regained ground against most of its forex rivals in yesterday’s trading session, thanks to strong data from the economy. Headline retail sales came in stronger than expected with a 0.7% gain versus the projected 0.4% increase while core retail sales marked a 0.5% gain instead of the estimated 0.1% uptick. To top it off, the previous month’s readings were revised higher. Initial jobless claims were also better than expected at 294K versus the estimated 299K.

EUR

The euro resumed its weak trend against most forex counterparts as the next round of targeted LTRO from the ECB churned out weak demand. This sparked talks of actual quantitative easing from the central bank in order to shore up lending and economic growth. French CPI was weaker than expected at a 0.2% decline in prices instead of the projected 0.2% uptick. For today, euro zone quarterly employment change and industrial production data is due and weak figures could lead to more euro selling.

GBP

The pound managed to hold on to its recent wins to the dollar despite the run in risk aversion recently. There were no major reports released from the UK economy then while today only has the CB leading index. This might show another decline following the previous 0.4% dip, which might force the pound to lose ground.

CHF

The franc had a relief rally yesterday when the SNB refrained from implementing negative deposit rates or intervening in the forex market. EURCHF moved close to the 1.2000 floor despite SNB head Thomas Jordan’s insistence that they are ready to act to defend the franc peg if necessary. The franc also drew support from upgraded growth forecasts. No other reports are due from the Swiss economy today.

JPY

The yen returned some of its recent wins to the dollar and the rest of its FX trading counterparts, as data from Japan continued to disappoint. Core machinery orders saw a 6.4% drop versus the projected 2.1% dip while the tertiary activity index showed a 0.2% decline, worse than the estimated 0.1% dip. Revised industrial production data is due today and downgrades might spark more yen weakness.

Commodity Currencies (AUD, NZD, CAD)

The comdolls resumed their slide to the dollar when risk aversion popped back in the financial markets. Headline jobs data from Australia was stronger than expected with a 42.7K increase in employment for November. However, the previous figure suffered a huge downgrade, enough to bring the jobless rate up from 6.2% to 6.3%. In New Zealand, a less dovish RBNZ statement led to gains for the Kiwi, although the rally wasn’t sustained. Chinese industrial production data and retail sales figures are up for release today.

By Kate Curtis from Trader’s Way

346

USD

The US dollar was in a weak spot last Friday, as data from the US economy came in mixed. US headline PPI was weaker than expected with a 0.2% decline and the core version of the report also indicated a weaker than expected figure as it stayed flat instead of picking up by 0.1%. Consumer sentiment surprised to the upside though, as the University of Michigan preliminary index climbed from 88.8 to 93.8, indicating a pickup in confidence. For today, medium-tier reports such as industrial production and capacity utilization, along with Empire State manufacturing index due.

EUR

The euro’s price action was a little more upbeat last week, despite weaker than expected figures from the region. Industrial production marked a mere 0.1% uptick while the employment change figure held steady at 0.2%, down from the previous 0.3% increase. For today, only the German monthly Buba report is due and no major announcement are expected, which might keep euro pairs in range or in their current trends.

GBP

The pound carried on with its slow but steady recovery to the dollar, even as the UK saw a weaker than expected construction output reading. The report marked a 2.2% drop in activity, worse than the projected 0.8% increase. Earlier today, the Rightmove HPI indicated a 3.3% drop in prices, following the previous 1.7% decline. Later on, the CBI industrial order expectations report is up for release and might show a steady figure at 3.

CHF

The franc managed to hold on to its recent gains against the dollar and advanced against the euro, as the SNB refrained from taking any action last week. Many expected the central bank to ease or intervene in the currency market since EURCHF is moving close to the 1.2000 floor and the country is facing potential deflation. Swiss PPI is due today and a 0.2% uptick in producer prices is expected to follow the previous 0.1% downtick.

JPY

The yen continued to advance against most of its counterparts, as traders anticipated the results of the lower house elections last Friday. The polls held over the weekend indicated a victory for Abe’s government, which would mean a continuation of their aggressive reform plans. This was taken negatively by Japanese equities, as the likelihood of another sales tax hike could lead to more spending weakness and a deeper recession. Earlier today, the Tankan manufacturing index fell from 13 to 12 while the non-manufacturing component saw an improvement from 13 to 16.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start this week, as the hostage situation in Australia weighed on the Aussie and Kiwi. Data from China was mixed last Friday, as industrial production missed the mark with a 7.2% gain versus the projected 7.6% increase while retail sales showed an 11.7% gain.

By Kate Curtis from Trader’s Way

347

USD

The US dollar had a mixed performance recently as it acted more as a counter currency to its forex rivals. Data from the US came in mixed, with stronger than expected capacity utilization and industrial production figures and weaker than expected Empire State manufacturing index and TIC long-term purchases data. For today, building permits and housing starts are due but both aren’t expected to lead to strong dollar movements ahead of tomorrow’s FOMC statement and CPI releases.

EUR

The euro managed to hold steady to the dollar in recent trading, even with the lack of top-tier data from the region. Today could be a more eventful session, as the German and French manufacturing and services PMI readings are due. Both countries are expected to post improvements in these sectors, which might be enough to lift the region’s PMI readings as well. Also due today is the German ZEW economic sentiment index, which could improve from 11.5 to 19.8, reflecting a pickup in optimism.

GBP

The pound lost ground to most of its counterparts, despite an improvement in the CBI industrial order expectations report. The reading climbed from 3 to 5 instead of holding steady at 3. There are plenty of reports lined up from the UK today so there could be more volatility among pound pairs. These include the UK bank stress test results, BOE financial stability report, and UK CPI, among which the inflation report might generate the most interest. Weakening price pressures would remind traders that it would take some time before the BOE tightens.

CHF

The franc was able to stay afloat in recent trading, even as the PPI reported weak producer inflation. The release showed a 0.7% decline instead of the projected 0.2% uptick, suggesting that deflation might take hold in the country. There are no major reports lined up from Switzerland today, as the franc might take its cue from euro movements.

JPY

The yen regained ground to most of its counterparts as risk aversion was very much present in recent trading. The victory of Prime Minister Abe was taken negatively by Japanese equities, forcing the Nikkei to chalk up more than 1% in losses. After all, this suggests that aggressive reforms and another potential tax hike might take place, which would put further pressure on Japanese companies. There are no major reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened to the dollar as risk aversion weighed on the higher-yielding currencies after the hostage-taking in Sydney and the drop in oil prices. Australia’s mid-year economic and fiscal outlook showed mixed forecasts, with weaker inflation and employment prospects eyed. Earlier today, China’s HSBC flash manufacturing PMI showed a drop from 50.0 to 49.5, indicating a return to contraction. Canadian manufacturing sales is up for release later and the New Zealand dairy auction is also set to take place.

By Kate Curtis from Trader’s Way

348

USD

The US dollar lost ground to most of its FX trading counterparts once more, although it managed to hold steady against the commodity currencies. Risk aversion seems to be in play, yet traders are keen to reduce their dollar holdings ahead of today’s FOMC statement. Data from the US economy on Tuesday was mixed, as building permits and housing starts came in line with expectations while the flash manufacturing PMI fell short and indicated a slowdown in industry expansion. The Fed is still expected to drop the “considerable time” phrase in discussing how long interest rates would remain low, but failure to do so might lead to more dollar losses.

EUR

The euro was off to a good start but wound up erasing its day’s gains when German and French manufacturing and services PMI readings printed mixed results. France saw a downturn in manufacturing and an improvement in services while Germany had a better manufacturing PMI and a weaker services PMI. Overall, the euro zone manufacturing PMI improved from 50.1 to 50.8 while the services PMI climbed from 51.1 to 51.9. The German ZEW also marked an improvement from 11.5 to 34.9, reflecting a strong rebound in confidence. Today has the euro zone final headline and core CPI figures due.

GBP

Despite weaker than expected CPI data, the pound managed to score gains against the dollar and some of its FX trading counterparts. Headline CPI fell from 1.3% to 1.0% while core CPI declined from 1.5% to 1.2% in November, which might lead BOE Governor Carney to write a letter of explanation to the Chancellor. UK jobs data is due today and a 19.8K pickup in hiring is eyed, along with an improvement in the jobless rate from 6.0% to 5.9%. The BOE minutes are also due, with a potential shift to a dovish stance likely to lead to pound weakness.

CHF

The franc was able to advance to the dollar in recent FX trading, despite the lack of data from the Swiss economy. There are still no reports due from Switzerland today, which suggests that USDCHF’s movement could be driven mostly by US economic events.

JPY

The yen continued to advance against most of its forex counterparts, taking advantage of the run in risk aversion over the past few days. So far, there have been no major reports released from Japan, as traders are still digesting the potential impact of PM Abe’s victory on the economy and the currency. Earlier today, Japan’s trade balance release indicated stronger than expected results and might continue to lift the yen throughout the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to recover in recent FX trading, as oil prices slid to a new record low once more. Geopolitical tension is also starting to weigh on risk sentiment again, in addition to the bleak data from China. The dairy auction turned out better than expected though, as the GDT price index marked a 2.2% gain. Later on, Canadian wholesale sales and New Zealand GDP are due.

By Kate Curtis from Trader’s Way

349

USD

The US dollar got a strong boost from the FOMC statement yesterday, even as the Fed retained its “considerable time” phrase in talking about how long interest rates are likely to remain low. However, Fed head Yellen did point out that they would be patient in determining potential gradual adjustments to monetary policy, which would stay data-dependent. There were three dissenters to this forward guidance, as a couple of hawks insisted on hiking rates sooner rather than later while one dove questioned the Fed’s efforts in boosting inflation. US equities also took the news positively, as the S&P and DJIA marked close to 2% in gains for the day. Initial jobless claims and the Philly Fed index are up for release today, with strong results likely to help the dollar extend its gains.

EUR

The euro gave up ground to the dollar once more while strengthening against the Japanese yen. Only the euro zone final CPI readings were released yesterday and there were no revisions to the headline 0.3% uptick and the core 0.7% increase in inflation. For today, the German Ifo business climate report could have an effect on euro price action, with analysts expecting to see an improvement from 104.7 to 105.6. Stronger than expected data could allow the shared currency to recover.

GBP

The pound was no match to dollar strength but managed to advance against the euro and the yen. Employment data from the UK was stronger than expected, as hiring picked up by 26.9K versus the estimated 19.8K figure while average earnings showed a 1.4% rise. The jobless rate held steady at 6.0% instead of improving to 5.9%. UK retail sales data is up for release today and a weaker 0.3% gain is eyed compared to the previous 0.8% uptick, although an upside surprise could be possible.

CHF

The franc also gave in to dollar strength in recent trading, despite an improvement in Switzerland’s ZEW economic expectations report. The reading climbed from -7.6 to -4.9, indicating less pessimism in the country. For today, SECO economic forecasts are due and any improvements could allow the franc to stay afloat.

JPY

The yen returned some of its recent gains after risk appetite improved in the financial markets. The FOMC’s pledge to keep rates low for the time being contributed to a rise in global equities, forcing the lower-yielding yen to retreat. There have been no major reports released from Japan then and none are due today, leaving the Japanese currency sensitive to risk flows.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened to the dollar in recent trading due to the FOMC statement but regained ground against the yen as risk appetite improved. Canadian wholesale sales marked a weaker than expected 0.1% uptick versus the estimated 0.9% growth while New Zealand reported a stronger than expected 1.0% growth figure for Q3. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader’s Way

350

USD

The US dollar returned some of its recent post-FOMC gains to its forex counterparts, as data from the economy came in mixed. Initial jobless claims was better than expected at 289K versus the projected 297K reading, but the Philly Fed index missed the mark and showed a drop from 40.8 to 24.5, worse than the projected decline to 26.3. There are no reports due from the US economy today, which suggests that the dollar could react to risk sentiment or could be sensitive to profit-taking.

EUR

The euro was able to bounce back to the dollar in yesterday’s sessions, as the German Ifo business climate index came in line with expectations. The reading improved from 104.7 to 105.5, reflecting a pickup in optimism. The GfK German consumer climate report is due today and it might show a climb from 8.7 to 8.9, which would also reflect an improvement in sentiment.

GBP

The pound had a strong recovery in yesterday’s London trading session, thanks to upbeat retail sales figures from the UK. Consumer spending jumped by 1.6% in November while the previous month’s reading was upgraded to show a 1.0% gain. Much of the pickup was spurred by lower gas prices, which allowed consumers to spend more of their disposable income on other items. Only medium-tier data namely CBI realized sales and public sector net borrowing figures are up for release from the UK today.

CHF

The franc suffered a sudden selloff in recent trading as the SNB announced negative deposit rates. EURCHF edged farther away from its 1.2000 floor after the announcement, as the central bank sought to ward off deflationary pressures and keep their local currency weak. There are no reports due from Switzerland today.

JPY

The yen continued to return some of its recent wins to the dollar, with traders bracing themselves for today’s BOJ monetary policy statement. No actual easing measures are expected, although dovish remarks could be heard as the central bank discusses future policy plans.

Commodity Currencies (AUD, NZD, CAD)

Thecomdolls managed to bounce off their recent lows as risk appetite improved in the markets. New Zealand visitor arrivals declined from 3.5% to 3.1% in November while the ANZ business confidence figure marked a drop from 31.5 to 30.4, reflecting weaker optimism. For today, the Loonie could take center stage with the CPI and retail sales figures due from Canada. Headline CPI could show a 0.2% drop while core CPI could see a 0.1% uptick. Headline retail sales might indicate a 0.4% drop while core retail sales could show a 0.2% gain.

By Kate Curtis from Trader’s Way

351

USD

The US dollar was able to end the year strong when risk aversion and falling commodity prices weighed on higher-yielding currencies. Apart from that, the upgrade in US GDP was more than enough to sustain the Greenback’s rallies as traders continued to price in a rate hike for this year. For this week, the FOMC minutes and the non-farm payrolls report are the main event risks for the dollar. Hawkish remarks from Fed head Yellen and her group of policymakers could sustain the currency’s gains and another set of strong labor data could also boost the dollar.

EUR

The euro was notably weaker towards the end of the year as the Greek political troubles stole the spotlight. With the current coalition government unable to gain enough support, snap elections will be held later this month and possibly determine whether or not the debt-ridden nation can secure another set of bailout funds. If they are unable to do so, debt troubles could once again weigh on the shared currency in the longer run. For this week, euro zone inflation readings are the main events on tap.

GBP

The pound gave up ground to the dollar as traders dwelled on the fact that the BOE is less likely to tighten monetary policy this year. The BOE is set to make another policy announcement this week but the pound could barely react as traders would rather see the minutes of their meeting. Also up for release this week are the construction and services PMIs from the United Kingdom.

CHF

The franc is still being weighed down by the SNB’s recent announcement of negative deposit rates. With this, the central bank will now charge commercial banks for parking cash in their vaults, thereby encouraging more lending activity. This could boost spending and inflation while keeping the franc weak, helping the SNB maintain its currency peg. There are no main reports due from Switzerland today.

JPY

Even though Japan released another set of bleak economic data in the past weeks, the Japanese yen continues to stay supported by risk aversion. For now, BOJ Governor Kuroda and the Japanese government have refrained from taking additional steps to boost growth. However, speculations of further easing or hints of more asset purchases could bring yen weakness back to the table.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to slide at the end of 2014 as falling oil prices were the dominant theme for their price action. So far, the OPEC hasn’t announced any cuts in production yet, which means that the oversupply could continue to keep a lid on price rallies. The dairy auction is set for New Zealand this week and more declines in prices could mean more Kiwi weakness. Also due this week are the Canadian Ivey PMI and Chinese CPI readings.

By Kate Curtis from Trader’s Way

352

USD

The US dollar continued to stay supported against most of its major counterparts, although some of its gains were limited in recent trading. The lack of top-tier data from the US economy forced the currency to return some of its wins, particularly against the commodity currencies. For today, the ISM non-manufacturing PMI is due and it might show a dip from 59.3 to 58.2, which would reflect weaker industry expansion. A stronger than expected result, however, could allow the dollar to resume its climb.

EUR

The euro was still in a weak state yesterday, as data from the region came in weaker than expected. Germany posted a flat CPI reading instead of showing the estimated 0.1% uptick while Spain showed a weaker than expected increase in hiring. Apart from that, speculations of a Greek exit from the euro zone led to talks of contagion and debt troubles once more, putting more weight on the shared currency. Spanish and Italian services PMI are up for release today and weak data could worsen the euro’s slide.

GBP

The pound edged lower against most of its counterparts when the UK construction PMI showed weaker than expected results. The figure fell from 59.4 to 57.6, worse than the estimated dip to 59.2 and indicative of a slower expansion in the construction industry. The services PMI is up for release today and might have a bigger impact on pound movement as the sector comprises a huge chunk of overall economic growth. The reading could improve from 58.6 to 58.9 and possibly give the pound a boost.

CHF

The franc was barely able to advance against the dollar as the SNB’s negative deposit rate announcement still weighed on the currency. Apart from that, continued weakness in the euro zone also opens up the possibility of more ECB easing, which might be then met with SNB intervention. There have been no reports released from Switzerland yesterday and none are due today.

JPY

The yen advanced against most of its forex rivals, as risk aversion stayed in place across the financial markets. There have been no reports released from Japan then and none are due today, leaving risk sentiment in play among the yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls tried to recover against the dollar in recent trading sessions, even as oil prices fell to new lows. Earlier today, Australia showed a stronger than expected trade surplus, buoyed by an uptick in both exports and imports. Later on, the New Zealand dairy auction is set to take place and another decline in dairy prices might mean more losses for the Kiwi. As for the Loonie, the lack of data from Canada suggests that oil price action could continue to direct the currency.

By Kate Curtis from Trader’s Way

353

USD

The US dollar gained support from risk aversion once more, allowing it to advance against the pound and euro. Data from the US was actually weaker than expected, as the ISM non-manufacturing PMI fell from 59.3 to 56.2, reflecting a slower pace of expansion in the services industry. For today, the FOMC minutes are up for release and it might show hawkish remarks from the policymakers. If so, the US dollar could continue to draw support on risk aversion and the increasing possibility of Fed tightening this year.

EUR

The euro lost further ground to its FX counterparts when speculations of a Greek euro zone exit continued to dominate the newswires. Data from the euro zone was mixed, with Spain reporting a stronger than expected services PMI and Italy showing a weaker than expected reading. For today, the euro zone retail sales report is up for release and it might show a 0.3% increase in consumer spending.

GBP

The pound was in a weak spot recently when the UK showed a lower than expected services PMI reading. The figure fell from 58.6 to 55.8, reflecting a slower expansion in the industry, which contributes a huge part to overall economic growth. For today, the BOE interest rate decision is scheduled and no monetary policy changes are expected. Traders are likely to wait for the minutes of the meeting to be released before taking large positions on pound pairs.

CHF

The franc edged lower to most of its forex counterparts as the impact of SNB negative deposit rates weighed on the currency. There have been no reports released from Switzerland yesterday and none are due today, leaving the franc sensitive to risk sentiment.

JPY

The yen advanced to the dollar and most of its forex counterparts recently, as risk aversion extended its stay in the financial markets. There have been no reports released from Japan yesterday and none are due today, which suggests that risk aversion could continue to keep the yen afloat.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance, as the Australian dollar and Canadian dollar caved to risk aversion and falling commodity prices. Meanwhile, the New Zealand dollar managed to see some gains thanks to a pickup in dairy prices during the latest auction. Canadian trade balance and Ivey PMI are up for release later today, with the surplus slated to turn into a 0.2 billion CAD deficit and the manufacturing index likely to fall from 56.9 to 52.3.

By Kate Curtis from Trader’s Way

354

USD

The US dollar had a mixed performance following the release of the FOMC minutes, although the safe-haven currency generally ended stronger. The minutes showed that the US central bank is in no rush to tighten monetary policy but is pleased with the improvements in the domestic policy. In particular, Yellen mentioned that they are unlikely to hike rates before April as inflationary pressures are weakening. For today, only the initial jobless claims report is due and it might show a 291K figure.

EUR

The euro continued its slide to its major counterparts, as inflation figures from the euro zone came in mixed. The headline figure marked a 0.2% drop, worse than the estimated flat reading while the core figure indicated a 0.8% gain, stronger than the projected 0.6% uptick. German retail sales came in stronger than expected with a 1.0% gain while the unemployment change report showed a better than expected 27K drop in joblessness. Euro zone retail sales is due today and a 0.3% uptick is eyed.

GBP

The pound slid to the dollar and the yen in yesterday’s trading sessions, even though there were no major reports released from the UK. For today, the BOE interest rate statement is due and no monetary policy changes are expected. Traders are keen to determine if there are any notable changes in policy bias, as the BOE appears to have shifted to a more dovish tone recently. Unless there are any surprises though, pound traders might wait for the minutes of the meeting to be released before taking large positions.

CHF

The franc continued to edge lower to the dollar in recent trading as the SNB reported a higher foreign currency reserves reading. No other reports are lined up for Switzerland today, which suggests that the franc could be sensitive to risk sentiment.

JPY

The yen was stronger against most of its counterparts, except for the US dollar, as risk aversion remained in the financial markets yesterday. There were no reports released from Japan then and none are due today, leaving yen pairs vulnerable to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to advance against the dollar, despite the recent dip in oil prices to new lows. Australia reported a 7.5% increase in building approvals instead of the projected 2.7% drop while Canada saw a stronger than expected Ivey PMI. The manufacturing index dipped from 56.9 to 55.4, higher than the estimated drop to 52.3. New Zealand building consents data is due later on.

By Kate Curtis from Trader’s Way

355

USD

The US dollar continued to advance against the European currencies while showing more weakness to the commodity currencies as traders position themselves ahead of today’s NFP release. The initial jobless claims report came in line with expectations of a 294K figure, setting the tone for a potential upside surprise for the NFP. Analysts expect to see 241K in hiring gains, slower compared to the previous 321K figure. However, revisions to previous readings are expected and might be enough to keep the dollar supported.

EUR

The euro slid lower to the dollar and consolidated to the yen, thanks to the lack of major reports in recent trading. Euro zone retail sales was stronger than expected at 0.6% while the producer price index showed a worse than expected 0.3% drop. Later today, German and French industrial production and trade balance figures are due, all of which are unlikely to cause huge euro price swings.

GBP

The pound failed to draw any support from the BOE interest rate statement, as Carney clarified that they are unlikely to hike rates before the general election this May. In fact, many believe that the central bank isn’t looking to hike rates at all this year, as inflation is projected to weaken further. External growth risks from the slowdown in the euro zone is also concerning for the BOE. UK manufacturing production, trade balance, and construction output numbers are due today.

CHF

The franc struggled to hold steady against the dollar yesterday since there were no top-tier data releases from Switzerland. The unemployment rate is up for release today and it might hold steady at 3.1%. Other than that, risk sentiment might also be responsible for franc price action for today.

JPY

The yen paused from its recent rallies when risk appetite appeared to improve in recent trading sessions. The Nikkei ended on a positive note, as Asian equities recovered off their lows. There are no major reports lined up from Japan today, suggesting that market sentiment could continue to dictate price trends.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to take advantage of the pickup in risk appetite, despite weaker than expected economic data. In Australia, retail sales marked a bleak 0.1% uptick versus the estimated 0.3% increase. China’s CPI came in line with expectations at 1.5% but the worse than expected 3.3% fall in PPI hints of weaker inflationary pressures in the coming months. Canada is expected to show a 10.3K pickup in hiring for December and report a 0.8% uptick in building permits.

By Kate Curtis from Trader’s Way

356

USD

The US reported a strong NFP reading for December, as the economy added 252K jobs versus the estimated 241K gain. Apart from that, the November reading was upgraded from an initially reported 321K increase to 353K, bringing the jobless rate down from 5.8% to 5.6% at the end of 2014. However, the participation rate once again marked a decline and reflected weaker confidence in the jobs market. Average hourly earnings was also weak as it indicated a 0.2% drop in wages for December and a downgrade from 0.4% to 0.2% in November. There are no major reports lined up from the US economy today, as traders could weigh in on the implications of the latest jobs release.

EUR

The euro managed to recover some of its losses to the dollar at the end of the week, as the US jobs release showed some weak points. Data from the euro zone was mostly weaker than expected though, with the German industrial production report marking a 0.1% decline and their trade surplus falling short of expectations. There are no major reports lined up from the euro zone today, leaving market sentiment as the main driver of forex price action.

GBP

The pound got back on its feet to the dollar on Friday, as data from the UK economy came in stronger than expected. Manufacturing production picked up by 0.7% versus the projected 0.4% rise while the trade balance showed a 8.8 billion GBP deficit instead of the estimated 9.5 billion GBP shortfall. There are no major reports due from the UK today, suggesting either consolidation or continuation of the current trends.

CHF

The franc strengthened slightly on Friday even as Switzerland showed a weaker than expected unemployment rate. The figure held steady at 3.2% instead of improving to the estimated 3.1% reading, indicating the lack of improvement in the jobs sector. For today, there are no reports due from Switzerland as franc pairs could be in for a quiet trading day.

JPY

The yen advanced to the dollar and most of its other forex counterparts on Friday even though there were no reports released from Japan. There are no reports due from Japan today since banks are closed for the holiday, which could mean a quiet Asian trading session.

Commodity Currencies (AUD, NZD, CAD)

The comdolls advanced to the dollar on Friday, as weaknesses in the NFP report inspired a quick dollar selloff. In addition, the Chinese CPI came in as expected at 1.5% although the PPI marked a sharper than expected decline. In Australia, retail sales was weaker than expected at a mere 0.1% uptick versus the projected 0.3% increase. Data from Canada was also weak, as the economy subtracted 4.3K jobs in December and saw a 13.8 decline in building permits. There are no major reports due from these economies today.

By Kate Curtis from Trader’s Way

357

USD

The US dollar regained ground against its forex counterparts as risk aversion popped its head back in the financial markets. There have been no major reports released from the US while today has a few medium-tier reports on tap, namely the JOLTS job openings figure and the IBD/TIPP economic optimism index. Risk sentiment might play a key role in driving dollar price action for today.

EUR

The euro edged lower to its forex rivals as early polls on the Greek snap election showed no clear winner from either side. This could mean that the country risks receiving its next tranche of bailout funds from the Troika, especially if the new government is unable to adhere to the required austerity measures. German WPI and Italian industrial production reports are on tap for today.

GBP

The pound was in a weak spot in recent trading, despite the lack of major data from the UK economy. Today has the CPI readings due, which could mean more losses for the pound if the actual figures show more weakness. The headline figure is slated to fall from 1.0% to 0.7%, which could lead BOE Governor Carney to write a letter to the Chancellor explaining the drop. PPI input prices could fall by 2.5% while the core CPI is expected to improve from 1.2% to 1.4%.

CHF

The franc gave back some of its recent wins to the dollar as risk sentiment dominated price action at the start of the week. There are no reports lined up from Switzerland today, as the franc could take its cue from euro zone updates or market sentiment.

JPY

The yen continued to advance against its forex rivals in yesterday’s trading session, thanks to the onset of risk aversion. Earlier today, the current account balance came in better than expected, with a 0.91 trillion JPY surplus versus the projected 0.69 trillion JPY surplus. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls erased some of their recent wins, despite the lack of top-tier reports yesterday. Earlier today, China’s trade balance came in stronger than expected, allowing the Australian dollar to gain support. No other reports are due from the comdoll economies.

By Kate Curtis from Trader’s Way

358

USD

The US dollar stayed supported by risk aversion throughout the trading day as geopolitical tension and falling commodity prices kept risk-taking in check. Data from the US economy was stronger than expected, with the JOLTS job openings report showing a gain to 4.97M and the IBD/TIPP economic optimism index climbing from 48.4 to 51.5. Later today, retail sales data are up for release and upside surprises could be seen. The headline figure is slated to post a 0.2% uptick while the core figure might show a 0.1% increase.

EUR

The euro had a mixed performance as it gave up ground to the dollar and the yen but managed to advance against the commodity currencies. Data from the euro zone was also mixed, with the German WPI printing a 1.0% decline and the Italian industrial production report showing stronger than expected gains of 0.3%. Euro zone industrial production data is due and a flat reading is expected.

GBP

The pound managed to shrug off weaker than expected UK inflation readings as most traders have already priced in this possibility. The headline CPI fell from 1.0% to 0.5% in December, spurred by falling oil prices and declining prices of supermarket goods. This has been welcomed by the UK Chancellor though, as he pointed out that this could spur spending and growth later on. Only the CB leading index and a speech from BOE Governor Carney are due today.

CHF

The franc resumed its slide to the dollar despite the lack of major reports from Switzerland. There are still no reports due from the Swiss economy today, suggesting that USDCHF could react more to US data and risk sentiment.

JPY

The yen advanced to its currency counterparts as risk aversion extended its stay in the financial markets. The Japanese current account balance came in better than expected while bank lending showed a 2.6% gain, both of which supported the yen in yesterday’s Asian trading session. There are no top-tier reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a decent start in today’s session but were weighed down by the tumble in copper prices, particularly the Australian dollar. There have been no actual economic reports printed from these economies recently, indicating that risk sentiment is driving price action. There are still no top-tier reports lined up from the comdoll economies for the rest of today’s trading sessions.

By Kate Curtis from Trader’s Way

359

USD

The US dollar had a mixed performance as it advanced to the yen but gave up ground to the pound. Against the franc and euro, consolidation was seen. Data from the US economy was weaker than expected, as both headline and core retail sales figures posted sharp declines. The headline retail sales report showed a 0.9% drop instead of the estimated 0.2% gain while the core retail sales figure indicated a 1.0% decline versus the projected 0.1% uptick. For today, PPI figures are due and negative readings are eyed due to the continuous slide in oil prices. Initial jobless claims and the Philly Fed index are also up for release.

EUR

The euro struggled to hold steady against the dollar while recovering against the Japanese yen. Euro zone industrial production was better than expected with a 0.2% gain instead of the expected flat reading. For today, only the euro zone trade balance and a speech by German central bank head Weidmann are lined up and might not have much of an impact on euro movement.

GBP

The pound managed to recover against the dollar and the yen in yesterday’s trading sessions after BOE Governor Carney assured that the UK economy will not fall into deflation. He also assured that the UK is more financially stable compared to the euro zone. There are still no major reports due from the UK economy today, which suggests that risk sentiment might be the main driver of pound price action.

CHF

The franc held steady to the dollar as the Swiss currency simply took its cue from euro movements. There have been no reports released from Switzerland then and none are due today.

JPY

The yen gave up some of its recent gains to its counterparts when risk appetite seemed to return to the markets yesterday. After all, the US printed a weak retail sales report and assured most traders that the Fed won’t be tightening policy just yet. There have been no actual reports released from Japan though and none are due today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was able to make a strong bounce in today’s Asian trading session after Australia printed a stronger than expected employment report. Hiring picked up by 37.4K in December versus the projected 5.3K increase while the November reading was upgraded. The jobless rate improved to 6.1% even as the participation rate also improved. There have been no reports released from New Zealand and Canada so far and none are lined up for today.

By Kate Curtis from Trader’s Way

360

USD

The US dollar had a volatile New York trading session as central bank announcements rocked the markets. At the end of the day, the lower-yielding currency ended mostly lower to its forex counterparts, as data from the economy came in mixed. Initial jobless claims and the Philly Fed index both came in below expectations while the core PPI surprised to the upside. The headline PPI was in line with expectations of a 0.3% decline. For today, the CPI release is lined up and weaker inflationary pressures are eyed. Also up for release are the preliminary consumer sentiment, industrial production, and inflation expectations.

EUR

The euro was under heavy selling pressure in recent trading after the SNB surprised with another announcement on negative deposit rates. Euro zone trade balance was weaker than expected at a 20 billion EUR surplus versus the estimated 21.3 billion EUR reading. Euro zone final CPI readings are up for release today and more signs of weakness could lead to more euro selling.

GBP

The pound managed to advance against the dollar in yesterday’s sessions, thanks to the relatively positive outlook for the UK economy. There have been no economic reports released from the UK then and there are none due today, indicating that the pound could be able to carry on with its slow climb.

CHF

The franc enjoyed a strong rally across the board after the SNB scrapped the franc peg. EURCHF fell by around 2000 pips even as the central bank lowered deposit rates to -0.75% from -0.25%. For SNB head Jordan, the franc is likely to stabilize later on and that the decision was a well thought-out one. Swiss retail sales data is up for release today and a 1.1% gain is eyed, which could provide further support for the franc.

JPY

The yen rallied against most of its counterparts after risk aversion set in during the SNB announcement. There have been no reports released from Japan then and none are due today, indicating that market sentiment could be responsible for yen price action for the rest of the trading week.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to take advantage of the USD weakness than ensued after the SNB decision and corresponding USDCHF selloff. Jobs data from the Australian economy was stronger than expected, as the economy added 37.4K jobs in December and saw its jobless rate drop to 6.1%. There are no reports due from the comdoll economies today.

By Kate Curtis from Trader’s Way

361

USD

The US dollar was in for a bit of consolidation towards the end of the week, as CPI reports came in weaker than expected. The headline figure indicated a 0.4% drop in price levels while the core figure stayed flat in December. The Greenback might be in for more sideways movement today as US banks are closed for the Martin Luther King holiday. Risk sentiment might be a key driver of price action for most dollar pairs.

EUR

The euro managed to hold steady to the dollar on Friday, even as the final core CPI reading was downgraded from 0.8% to 0.7%. Only the euro zone current account balance is up for release today and this might not have such a huge impact on the shared currency’s price action. In any case, the current account surplus is slated to widen from 20.5 billion EUR to 22.7 billion EUR, which might continue to keep the euro afloat.

GBP

The pound continued its slow ascent to the dollar on Friday, despite the lack of data from the UK economy. Only the Rightmove HPI is scheduled for today and it indicated a 1.4% increase while the previous figure was revised to show a smaller decline, providing a bit of support for the pound for now.

CHF

The franc calmed down at the end of the week after its massive rally when the SNB removed the franc peg on Thursday. The Swiss retail sales report showed a surprise 1.2% drop when analysts were expecting to see a 1.1% gain, forcing the franc to return some of its recent gains. The PPI report is due today and a 0.6% decline is eyed.

JPY

The yen gave back some of its gains at the end of the week as most traders booked profits off their yen trades last Friday. Japan’s tertiary industry activity index showed a 0.2% uptick, slightly weaker than the estimated 0.3% gain but still an improvement over the previous 0.1% drop. Japanese revised industrial production and consumer confidence data are due today, although traders might be holding off any large positions ahead of this week’s BOJ statement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to end the week on a positive note, with the exception of the Loonie which continued to get weighed down by falling oil prices. There were no major reports released from the comdoll economies then and today has only a few medium-tier reports on tap. These are the Canadian foreign securities purchases and New Zealand’s NZIER business confidence figure, both of which might not have such a huge effect on price action.

By Kate Curtis from Trader’s Way