Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
42

USD

The U.S. dollar continued to advance against its major currency counterparts in yesterday’s trading session as the upbeat monetary policy expectations from the Fed provide support for the Greenback. Today’s set of economic data could confirm if the Fed will be moving closer to implementing their exit plan, as the U.S. will be printing its Empire State manufacturing index, PPI, and industrial production data. The Empire State index is projected to improve from 3.1 to 3.6 while producer prices are likely to post small upticks. Note that worse than expected figures could convince traders that the Fed isn’t likely to wind down their asset purchases anytime soon, which could force the dollar to return some of its recent gains.

EUR

Euro zone GDP is set to come in weaker than the estimated -0.1% figure for Q1 2013, as France and Germany have both posted lower than expected growth. The French economy contracted by 0.2%, worse than the estimated 0.1% dip, while the German economy posted a mere 0.1% uptick for the quarter. Italian GDP is still set to be printed but the odds seem to favor a downside surprise, as analysts predict a 0.4% drop in economic growth. Overall, this should weigh on the region’s GDP, which could come in negative and mark the euro zone’s sixth quarter in recession.

GBP

The U.K. will be printing is claimant count change and releasing its BOE inflation report in today’s London session. Another gain in hiring is projected to follow the previous month’s 7.0K drop in claimants, which should be enough to keep the jobless rate steady at 7.9%. However, worse than expected jobs data could worsen the pound’s slide against the U.S. dollar, possibly pushing GBP/USD below the 1.5200 major psychological level.

CHF

Switzerland is set to release its ZEW economic expectations figure and PPI figures in today’s European session. The ZEW report could show a drop from the previous month’s 20.0 reading as recent economic data from Switzerland have disappointed while the PPI report is slated to show a 0.2% drop in producer prices. Downbeat reports could continue to weigh on the franc, which is already undergoing heavy selling pressure against the U.S. dollar.

JPY

The Japanese yen resumed its selloff in today’s Asian session as Japan’s tertiary industry activity index disappointed and posted a 1.3% drop in services activity. This was way off the estimated 0.6% decline and enough to erase the 1.2% increase seen in the previous period. Consumer confidence in Japan also weakened, with the index falling from 44.8 to 44.5 instead of rising to the estimated 45.8 reading.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies still sold off against the dollar although at a slower pace in yesterday’s trading. These pairs are currently nearing significant inflection points on longer-term time frames, which explains why price movement is stalling. Perhaps markets are awaiting more catalysts or confirmation from the U.S. economy that could allow these selloff to resume.

By Kate Curtis fromTrader’s Way

43

USD

The U.S. dollar retreated against most of its major counterparts in yesterday’s New York session, as weak economic figures put a cap on its recent rallies. The Empire State manufacturing index turned out to be a huge disappointment as it printed a -1.4 figure instead of the estimated improvement from 3.1 to 3.6. Producer price levels have also disappointed as a 0.7% decline in input prices was recorded for May, its largest drop in three years. This goes to show that inflation is still weak in the country, which means the Fed might not tighten monetary policy just yet. For today, watch out for the CPI, housing figures, and Philly Fed index. Note that weak data could drive the dollar lower against its counterparts again.

EUR

Weaker than expected GDP readings from euro zone’s largest economies put the entire region deeper in recession for the first quarter of the year. The GDP reading showed a 0.2% contraction, worse than the estimated 0.1% downtick in growth. This suggests that the ECB could move forward with its plan to implement negative deposit rates and possibly increase its purchases of corporate and long-term bonds just to boost the economy. Only medium-tier data are set for release today but these leading indicators could force the euro to resume its drop if they come in weak.

GBP

The pound managed to hold on to its recent levels against the U.S. dollar as the U.K. claimant count change beat expectations. The report showed a 7.3K drop in the number of people claiming jobless benefits for April, allowing the jobless rate to drop from 7.9% to 7.8%. There are no major reports due from the U.K. today which suggests that pound price action could be dependent on market sentiment and U.S. reports.

CHF

Switzerland reported a huge drop in its ZEW economic expectations figure from 20.0 to 2.2 in May, reflecting weaker optimism for the country’s economic outlook. Nonetheless, the franc was able to rebound against the euro and the dollar in yesterday’s trading as both the euro zone and U.S. printed weak data. For today, there are no major reports from Switzerland, which suggests that franc trading could be dependent on market sentiment or data from other economies.

JPY

The Japanese yen made a small recovery against some of its major counterparts in yesterday’s trading, as USD/JPY fell short of hitting the 103.00 handle. EUR/JPY suffered a similar selloff as GDP figures from the euro zone while other yen pairs managed to hold on to their recent levels. Japan’s industrial production report came in better than expected as it showed a 0.9% uptick, higher than the estimated 0.2% increase. No other reports are due from Japan for the rest of the day.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies managed to pare their losses against the U.S. dollar as a weak round of data from the U.S. kept dollar gains at bay. These currencies were also able to hold steady against the yen. There were no major reports released from Australia and New Zealand recently, but Canada did print a weaker than expected manufacturing sales report. This showed a 0.3% drop in sales instead of the estimated 0.6% growth. Only the producer prices report is due from New Zealand in the next few trading hours, leaving the commodity currencies dependent on market sentiment.

By Kate Curtis from Trader’s Way

44

USD

The U.S. economy chalked up another day’s worth of weak economic figures as its CPI and Philly Fed index ended up below expectations. The core CPI figure for April showed a 0.1% uptick instead of the projected 0.2% increase while the headline figure showed a 0.4% decline, worse than the estimated 0.3% drop and the previous 0.2% decline. The Philly Fed index highlighted another disappointment in the manufacturing sector, with the figure for May slipping from 1.3 to -5.2 instead of improving to 2.5. For today, the preliminary University of Michigan consumer sentiment figure is set for release and it’s expected to print an improvement from 76.4 to 77.9 for the current month. Weak results could keep the dollar’s gains in check.

EUR

The euro had a small rebound against the U.S. dollar in yesterday’s trading as the U.S. economy printed a set of poor figures. However, EUR/USD was unable to sustain its gains past the 1.2900 mark as euro zone officials kept talking about the possibility of implementing negative deposit rates. Euro zone CPI came in line with consensus as the headline figure showed a 1.2% annual increase while the core report printed a 1.0% uptick. There are no reports from the euro zone today so pay special attention to speeches from finance officials in the region.

GBP

The pound continued its rally against the Greenback in yesterday’s trading, pushing GBP/USD back above the 1.5200 major psychological support level. No reports were released from the U.K. yesterday but the positive sentiment from the previous day, when the U.K. printed strong jobs data and the BOE upgraded growth forecasts, continued to provide support for the pound. There are no reports on the U.K. schedule today but MPC member Weale is scheduled to give a speech, so pay attention to his assessment and outlook for the economy.

CHF

USD/CHF dipped below the .9600 level in yesterday’s trading when the U.S. printed worse than expected CPI and manufacturing reports. However, the pair was able to rebound quickly and land back above .9600. There were no reports released from Switerland yesterday and none are due today so keep close tabs on market sentiment and U.S. data if you’re trading USD/CHF.

JPY

The Japanese yen fought hard against the U.S. dollar in yesterday’s trading, allowing USD/JPY to linger around the 102.00 area. Japanese industrial production came in stronger than expected, clocking in a 0.9% increase for April, up from the 0.2% previous figure. Core machinery orders, which was printed earlier today, also came in stronger than expected with a 14.2% jump.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies continued to bleed against the U.S. dollar as the recent slide in commodity prices started to weigh on their price action. There were no reports released from Australia and New Zealand recently, while Canada is slated to print its CPI data in today’s U.S. session. A 0.2% increase in core price levels are projected while the headline figure is likely to stay flat.

By Kate Curtis from Trader’s Way

45

USD

The U.S. dollar is still able to draw support from news of the Fed mapping out its stimulus exit plan, despite the wave of bad economic data from the U.S. last week. Inflation reports and manufacturing indices all came in weaker than expected, yet consumer sentiment for the month managed to beat the consensus. There are no major reports on the U.S. schedule for today, as most banks are on a holiday. Be mindful of higher volatility in reaction to FOMC member Evans’ speech in today’s U.S. session.

EUR

The euro dipped to the 1.2800 major psychological support level last week but managed to pullback to 1.2850 earlier this week. Sentiment for the euro remains bearish as the ECB is mulling negative deposit rates and increasing its bond purchases in order to stimulate growth in the region. There are no major reports due from the euro zone today.

GBP

The pound is struggling to stay afloat against the U.S. dollar, as this week’s set of data from the U.K. could determine if the pair could hold on to the 1.5200 major psychological level. There are no reports due from the U.K. today as the first set of data, which are the inflation reports, are due tomorrow. U.K. annual CPI is slated to fall from 2.8% to 2.6% for April, which might mean the BOE has enough scope to ease further if necessary.

JPY

The yen lost ground to the dollar on Friday as the latter benefitted from strong consumer sentiment figures, pushing USD/JPY above the 103.00 handle. There are no major reports due from Japan today as traders await the BOJ interest rate decision on Wednesday. Traders could book profits off their yen shorts prior to the actual event as the central bank could highlight the recent developments in the Japanese economy.

CHF

The franc also lost a lot of ground to the U.S. dollar on Friday as the University of Michigan preliminary consumer sentiment figure beat expectations. Swiss banks are on a holiday today, which means that there could be quiet trading among franc pairs.

Commodity Currencies (AUD, CAD, NZD)

There are no major reports from the comdoll economies today as AUD/USD, USD/CAD, and NZD/USD could be more sensitive to U.S. events. Bear in mind that FOMC member Evans is set to testify in today’s U.S. session and he could remark on the need to withdraw stimulus as early as June. If that’s the case, the commodity currencies could continue to sell off against the Greenback.

By Kate Curtis from Trader’s Way

46

USD

The US dollar continued to retreat against its major counterparts, as traders booked profits from key support and resistance levels on the major currency pairs. It seems as though market participants are waiting for further clues on the US economy and the Fed’s monetary policy before pushing the dollar any higher. The FOMC minutes release and Fed head Bernanke’s speech could set the tone for dollar trading this week, but these events are scheduled for tomorrow. For today, only a few speeches from some finance officials and Fed members are on tap. If these officials talk about the urgency of withdrawing monetary policy stimulus as early as June, the dollar could resume its recent rallies.

EUR

The euro has recovered some of its recent losses against the US dollar, as EUR/USD has pulled up to the 1.2900 major psychological level. European banks were on a holiday yesterday, which explains the careful trading of euro pairs, and we might see more of the same today. There are no major events on the euro zone calendar, as the only economic release is the German PPI figure.

GBP

Cable is fighting to stay above the 1.5250 minor psychological level as the pound managed to rebound against the dollar in the past few trading sessions. UK CPI data are set for release today and this should show if the BOE has scope to loosen up monetary policy. Although the BOE isn’t looking to do so anytime soon, as the British economy has recently shown signs of life, weak inflation could still spur the central bank to pump up liquidity in the system. The annual inflation reading is projected to fall from 2.8% to 2.6% in April.

CHF

The Swiss franc has been holding its ground against the US dollar so far this week, as USD/CHF reached resistance near the .9700 major psychological level. There are no major catalysts on Switzerland’s schedule for today, which suggests that the pair could maintain its current levels as traders await for more signs from the markets.

JPY

The Japanese government recently upgraded its growth forecasts, citing a rebound in exports and domestic economic activity. This was enough to keep USD/JPY trading below the 103.00 major psychological resistance this week. Yen traders might be feeling a little more cautious today, as the BOJ is gearing up for its monetary policy decision in tomorrow’s Asian session.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies are currently stalling at key inflection points, with USD/CAD finding resistance at 1.0300 and AUD/USD perched at the 0.9750 support area. NZD/USD seems to be breaking off its recent selloff as well, with the pair retesting the .8200 major psychological level. The RBA just released the minutes of its latest monetary policy meeting wherein they decided to slash interest rates by 0.25%. However, the minutes didn’t provide any clues as to whether the central bank will ease again, which explains why AUD/USD is staging a relief rally after the release. BOC Governor Carney is set to give a speech in today’s US session and this could determine if USD/CAD makes a bounce and retests 1.0300.

By Kate Curtis from Trader’s Way

47

USD

The U.S. dollar lost ground to most of its major counterparts as some Fed officials talked about the low likelihood that the Fed will reduce its stimulus program soon. Fed officials Bullard and Dudley seem to favor the current easing measures, saying that these are appropriate for the meantime and that stronger improvements are necessary before warranting a reduction of bond purchases. With that, market participants will be all eyes and ears on the release of the FOMC meeting minutes later today to see how the Fed is divided on the issue. Fed head Bernanke is also set to give a speech later today and possibly talk about his monetary policy stance as well.

EUR

The euro continues to recover against the U.S. dollar as EUR/USD has found itself back above the 1.2900 major psychological resistance in today’s Asian session. The only events on the euro zone’s calendar today are the current account release and the German bond auction. With that, EUR/USD action could be more dependent on U.S. market events, which are Bernanke’s speech and the FOMC minutes release.

GBP

There are several event risks on the pound’s calendar today, and these are the release of the MPC meeting minutes and the UK retail sales figure. The pound underwent heavy selling pressure yesterday when annual inflation missed forecasts of a decline from 2.8% to 2.6% and fell all the way down to 2.4%. This suggests that the central bank has room to ease further if necessary, and the minutes of their lates meeting should shed light on the outlook of monetary policy committee members.

CHF

SNB Chairman Thomas Jordan is set to give a speech in today’s London session, adding to the event risk for USD/CHF. So far, the pair has been very sensitive to U.S. economic updates, with the FOMC meeting minutes and Bernanke’s testimony set to rock the markets in today’s U.S. session.

JPY

As expected, the Bank of Japan made no changes to its monetary policy in today’s interest rate decision. However, Governor Kuroda did give himself a pat on the back for the positive effects of their aggressive easing program, which boosted domestic economic activity and provided support for Japan’s exports. The Japanese trade balance did show a slight improvement for April but the actual figure was still weaker than expected because of the slowdown in Europe’s demand for Japanese products.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies struggled to hold their ground against the U.S. dollar as the lack of top-tier data kept these pairs mostly in sideways consolidation. AUD/USD continues to test the .9800 major psychological resistance as the country printed a 7.0% decline in Westpac consumer confidence. Meanwhile, Canada is gearing up to release the latest retail sales figures in today’s U.S. session.

By Kate Curtis from Trader’s Way

48

USD

Despite the recent wave of strong U.S. data, the dollar still lost ground to its major counterparts, particularly the yen in yesterday’s trading. Traders took profits off key support levels, such as 0.9600 on AUD/USD, which paved the way for a dollar selloff. In addition, the rally in U.S. equities has sparked a risk rally, which has benefitted the higher-yielding currencies. The U.S. initial jobless claims reading was at 340K, better than the estimated 350K reading and consistent with the recent improvements in the labor market. The flash manufacturing PMI and the new home sales also came in better than consensus. For today, the U.S. is set to print its durable goods orders data and possibly print a 1.5% rebound in its headline figure.

EUR

Euro zone PMI figures came in mixed for April, although most still remained below 50.0 indicating industry contraction. The German and French services PMI both missed expectations while the manufacturing industries showed better than expected results. Overall, euro zone’s services PMI landed at 47.7 up from 46.9 while the manufacturing PMI rose from 46.7 to 47.8. German GDP and German GfK consumer sentiment data are set for release today.

GBP

The British pound was able to stage a nice recovery against the U.S. dollar in yesterday’s trading as it bounced above the 1.5100 major psychological level. U.K. GDP came in line with consensus, with no revision to the 0.3% uptick in growth. For today, the BBA mortgage approvals report should set the tone for pound trading during the U.K. session. The report is expected to show an improvement from 31.2 to 32.8.

JPY

The Japanese yen made a strong rally in yesterday’s trading after the Nikkei stock index slumped by 7.3%. This pushed USD/JPY to test the 101.00 major psychological support before rebounding up to 102.50. Analysts attribute the drop to a major correction in the markets and risk aversion, although the uptrend on USD/JPY remains intact. There are no major reports due from Japan today but Governor Kuroda is slated to deliver a speech within the trading day.

CHF

The Swissy had a choppy trading day yesterday as it retreated from its recent gains then made a strong rebound. There are no major reports due from Switzerland today so USD/CHF trading could depend mostly on U.S. data.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies staged a nice rebound against the dollar in yesterday’s trading, boosted in part by risk appetite. Chinese manufacturing PMI came in below consensus and below the 50.0 mark, which weighed on the Australian dollar during the Asian session, but the pair was able to bounce off the .9600 level. New Zealand printed a weaker than expected trade surplus while Canada’s economic schedule remains empty.

By Kate Curtis fromTrader’s Way

49

USD

The dollar had a mixed trading day on Friday as it lost ground to the Japanese yen and euro but managed to pocket some gains against its other major counterparts. US durable goods orders data came in better than expected, as both headline and core figures printed rebounds from the previous month’s data. Headline durable goods orders increased by 3.3%, erasing part of the previous 6.9% decline, while core durable goods orders rose by 1.3%. There are no reports from the US today as banks are on a Memorial Day holiday.

EUR

The euro is still struggling to stay above the 1.2900 level against the US dollar, as data from Germany came in stronger than expected on Friday. The German GfK consumer climate figure improved from 6.2 to 6.5 while the German IFO business climate report printed a rise from 104.4 to 105.7, higher than the estimated increase to 104.6. There are no reports due from the euro zone today.

GBP

The pound continued to climb slowly against the US dollar on Friday, despite weaker than expected BBA mortgage approvals from the UK. The housing loan report showed a 32.2K reading, down from the estimated 32.7K figure but still better than the recent 31.4K reading. There are no reports due from the UK today.

CHF

The Swiss franc took advantage of dollar weakness on Friday as USD/CHF slid lower to the .9600 major psychological support. There were no reports released from Switzerland then and none are due today, which suggests that USD/CHF might be stuck in consolidation for the next trading sessions.

JPY

The Japanese yen staged another strong rally on Friday as the Nikkei index chalked up another drop. The selloff in equities is currently supporting the yen as traders are selling stocks in exchange for the yen. However, the USD/JPY pair is likely to rebound as the BOJ has made no changes to its easing policy while the Fed is mulling an exit to its stimulus program. The minutes of the latest BOJ meeting were released in today’s Asian session.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies continue to test key levels (0.9600 for AUD/USD and .8100 for NZD/USD) as markets await further catalysts. There are no major reports from the comdolls this week, except for the BOC rate decision and Canadian monthly GDP release.

By Kate Curtis from Trader’s Way

50

USD

U.S. traders are back in the grind today, after taking a day off in honor of Memorial Day. The U.S. will be printing its CB consumer confidence report for May and possibly show a strong rise in optimism. The reading is slated to increase from 68.1 to 70.7 for the month, which should provide strong support for the dollar and the U.S. economy as well. After all, consumers have been driving most of the country’s economic activity and an improvement in confidence could be indicative of more spending later on.

EUR

More liquidity for euro pairs is expected today as U.K. and U.S. traders are back on their trading desks. The only report due from the euro zone is the German import prices data, which shouldn’t have such a huge impact on EUR/USD or EUR/JPY. With that, keep close tabs on market sentiment and U.S. data as these could dictate price action across the board.

GBP

U.K. traders are back from their Spring Bank holiday today, which means there could be bigger price movements among pound pairs. There are no economic releases from the U.K. but monetary policy committee member and Deputy Governor Paul Tucker is set to give a testimony. If the central bank official drops hints on the BOE’s future monetary policy moves, it could send the pound rallying or dropping, depending on what he says.

CHF

Swiss employment data is on tap for today and the report is estimated to show a drop from 4.12 million to 4.11 million for the first quarter of the year. If so, that would mark the first drop in employment for the past five quarters, which could be negative for the franc. Otherwise, the franc might have a chance at holding on to its recent levels or even pocketing some gains. Take note that the Swiss trade balance is also up for release today.

JPY

The Nikkei has been able to get back on its feet for today’s Asian session, allowing USD/JPY to climb as well. There are no major reports due from Japan, as yen pairs could take their cue from market sentiment today.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies edged slightly lower against the U.S. dollar as commodity prices declined on Monday. AUD/USD is currently testing the key .9600 support while NZD/USD is sitting close to .8000. There are no major reports due from these commodity-dependent economies today, which suggests that they could stay sensitive to commodity price action and market sentiment.

By Kate Curtis from Trader’s Way

51

USD

The U.S. dollar was supported by stronger than expected consumer confidence data in yesterday’s New York session. The CB consumer sentiment figure came in higher than the estimate as it jumped from an upwardly revised 69.0 to 76.2, beating the consensus at 70.7. This reflects how consumers have been the backbone of U.S. economic growth, as spending comprises nearly 70% of the GDP. For today, the only event on the U.S. schedule is FOMC member Rosengren’s speech. Watch out for his remarks concerning the Fed’s plan to scale down asset purchases.

EUR

The euro was driven sharply lower in yesterday’s trading when the topic of negative deposit rates came up again. It didn’t help that German import prices fell more than expected, chalking up a 1.4% decline instead of the estimated 0.2% decline. For today, Germany will print its preliminary CPI and employment change report, and these should have a huge impact on euro trading since Germany is seen to be the economy responsible for most of the growth in the euro zone.

GBP

The pound gave way to U.S. dollar strength in yesterday’s trading as GBP/USD fell back to the 1.5050 minor psychological level. MPC member Bean is set to give a testimony today while the U.K. will print its CBI realized sales report. Downbeat remarks, combined with a weak sales figure, could drive the pound even lower. CBI realized sales are projected to improve from -1 to 4, which might provide support for GBP/USD.

CHF

Swiss data was mixed yesterday as the trade balance disappointed but the employment level report came in strong. The level was at 4.15 million for the first quarter of the year, higher than the 4.12 million figure posted for the last quarter of 2012. Meanwhile, the Swiss trade surplus narrowed from 1.89 billion CHF to 1.73 billion CHF instead of widening to 2.02 billion CHF. For today, the UBS consumption indicator showed an improvement from 1.24 to 1.46. No other reports are due from Switzerland for the rest of the trading day.

JPY

The Japanese yen lost ground to most of its counterparts in yesterday’s trading, despite the stronger than expected retail sales report. Consumer spending is down by only 0.1% on an annual basis instead of the estimated 0.4% drop. This was also an improvement over the previous 0.3% year-on-year decline. No other reports are due from Japan today.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies lost ground to the Greenback once more, as the U.S. printed strong economic data yesterday. AUD/USD has broken below the key .9600 support while USD/CAD bounced from 1.0350. NZD/USD remains perched above the .8000 mark, waiting for more catalysts. The BOC rate decision is scheduled in today’s New York session and this should spark some volatility for USD/CAD. Take note that this is Carney’s last rate statement as BOC head so no changes are expected.

By Kate Curtis from Trader’s Way

52

USD

The US dollar continued to slide against its major counterparts in yesterday’s trading sessions as markets seemed to show exhaustion from its recent rallies. Fed official Rosengren’s speech was probably the highlight of the New York session yesterday and even if he did say that he supported a modest reduction of asset purchases in a few months, it wasn’t enough to spark a fresh round of dollar buying. For today, the U.S. will be printing its preliminary GDP reading for the first quarter of the year and no revisions from the advanced reading of 2.5% is expected. Initial jobless claims and housing sector data could also drive dollar action today.

EUR

The OECD lowered its global growth forecasts, citing Europe as one of the major drags to overall economic growth. German data came in mixed yesterday, with a stronger than expected inflation figure and a weaker than expected jobs report. German CPI increased by 0.4% while unemployment grew by 21K, much higher than the estimated 4K increase in joblessness. Only medium-tier reports, namely the retail PMI and Italian bond auction outcome, are due from the euro zone today.

GBP

The U.K. printed a weaker than expected CBI realized sales figure as the reading slipped from -1 to -11 instead of improving to 4. However, GBP/USD still managed to rebound off its recent lows and climb back to the 1.5150 area earlier today. Only the Nationwide HPI is due from the UK in today’s London session and this report isn’t expected to have a material effect on pound price action.

JPY

The yen rallied against its counterparts once more, bringing USD/JPY back to the 101.00 region. No reports are due from Japan today, as traders could position themselves ahead of the CPI figures due tomorrow. Both Tokyo and the national level are projected to show declines in price levels but smaller ones compared to the previous period.

CHF

Swiss UBS consumption indicator improved from 1.24 to 1.46, lending strong support to the franc. USD/CHF fell back to the .9600 area as a result. Today’s Swiss GDP release could determine whether this level would hold, as the economy is expected to have grown by another 0.2% in the first quarter of the year.

Commodity Currencies

The commodity currencies were able to recover against the U.S. dollar in yesterday’s trading as most traders took profits off key levels, such as .9600 for AUD/USD. The BOC retained its relatively hawkish bias as it said that some modest withdrawal of stimulus might be needed. Australian building approvals came in strong at 9.1% but private capital expenditure posted a 4.7% quarterly drop.

By Kate Curtis from Trader’s Way

53

USD

There are a lot of red flags on the U.S. calendar this week, which could determine if markets are really shifting their stance on the U.S. dollar or just making huge corrections before trends resume. Take note though that it’s already the start of summer season in the United States, which means that liquidity could be dried up. This could make room for more range plays than actual trends. For today, the ISM manufacturing PMI is set for release and a small downtick from 50.7 to 50.6 is expected.

EUR

EUR/USD is currently trading above the 1.3000 major psychological level, as the dollar rallies were capped last week. However, fundamentals in the euro zone remain very weak and this could be highlighted in this week’s ECB interest rate statement. Traders could start pricing in expectations of negative deposit rates as early as today, with only medium-tier reports due from the euro zone.

GBP

The pound is showing resilience against the U.S. dollar, as GBP/USD made a bounce off the neckline of the double bottom on its 1-hour chart. The manufacturing PMI is set for release from the U.K. today and an improvement from 49.8 to 50.3 is eyed, which would mean that the industry is expanding once more. A stronger than expected figure could push GBP/USD to new highs.

JPY

The Japanese yen has been rallying against its counterparts last week as Japanese equities have been falling. There are no major reports due from Japan this week, as the yen could take its cue from risk sentiment and Japanese stock markets or bond yields.

CHF

The Swiss franc has been gaining against the Greenback, after breaking below the .9600 handle last week. Swiss SVME PMI is due today and this could print a jump from 50.2 to 50.9, which would lend more support for the Swiss franc. However, traders might be cautious about buying the currency more as the SNB has previously reiterated its pledge to keep the franc undervalued.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies suffered a bloodbath last Friday, as RBNZ officials expressed their intention to intervene again. The last time this happened, the central bank actually staged a secret intervention before admitting to it months later. As for the Australian dollar, Chinese official manufacturing PMI figures stayed above 50.0 but the HSBC final reading came in at 49.2. Australian retail sales were also weaker than expected at 0.2%. No reports are due from Canada today.

By Kate Curtis from Trader’s Way

54

USD

The U.S. dollar suffered a sharp selloff in yesterday’s trading when the ISM manufacturing PMI came in worse than expected. The actual figure showed a contractionary reading of 49.0, worse than the estimated decline from 50.7 to 50.6. Only the trade balance is due from the U.S. today and a wider deficit is expected, showing that imports outpaced exports for the month.

EUR

The euro landed back above the 1.3000 mark against the dollar yesterday, with the pair even reaching 1.3100. Better than expected manufacturing PMI from Spain and Italy helped boost the euro, but EUR/USD’s strong move came after the US printed a bleak ISM manufacturing PMI figure. For today, only the Spanish unemployment change report is due and it’s expected to show a decline in joblessness.

GBP

The pound chalked up even more gains against the U.S. dollar yesterday, as the UK manufacturing PMI came in much better than estimated. The figure climbed from 50.2 to 51.3, instead of rising to just 50.3. The construction PMI is due from the UK today and it’s estimated to improve from 49.4 to 49.7, with a good chance of an upside surprise.

CHF

USD/CHF tested the broken support at .9600 yesterday and dipped even lower when the US manufacturing figures came out. SVME PMI turned out stronger than expected at 52.2, stronger than the estimated improvement from 50.2 to 50.9. For today, the Swiss calendar is empty, which suggests that USD/CHF could take its cue from U.S. data.

JPY

The Nikkei suffered another strong selloff yesterday, leading USD/JPY to test the 99.50 former support. It didn’t help that US data was weaker than expected. Japanese monetary base increased by 31.6%, which means that there’s much more liquidity in the economy, while the average cash earnings came in short at 0.3% instead of the estimated 0.6% rise. No other reports are due from Japan today.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies recovered against the U.S. dollar in yesterday’s trading, with AUD/USD climbing back above .9700 and NZD/USD recovering above .8000. The RBA kept interest rates unchanged as expected, but said that there’s room for more rate cuts and that the Australian dollar is still overvalued. Canada will release its trade balance today and a deficit of 0.4 billion CAD is expected.

By Kate Curtis from Trader’s Way

55

USD

The U.S. dollar had a mixed day in the markets, as it managed to rally against the commodity currencies and the yen but held steady against most European currencies. Only the trade balance was released from the U.S. yesterday and this came out better than expected, as the deficit widened from 37.1 billion USD to 40.3 billion USD instead of 41.1 billion USD. For today, the U.S. is set to print its ADP non-farm employment change figure and its ISM non-manufacturing PMI. The ADP report could show a 171K increase in private payrolls while the ISM non-manufacturing PMI is slated to improve from 53.1 to 53.4. However, weaker than expected data could be negative for the dollar, as these might imply that the U.S. recovery isn’t that strong yet.

EUR

The euro managed to stay above the 1.3000 major psychological level in yesterday’s trading as Spain’s unemployment change figure came in better than expected. Euro zone’s third largest economy chalked up a 98.3K drop in joblessness for May. For today, the euro zone will be releasing services PMI from Spain and Italy. Both countries printed better than expected results for their manufacturing sector earlier this week so there’s a chance that services data could beat expectations as well.

GBP

Despite the better than expected construction PMI figure, the pound’s gains were limited below the 1.5300 handle against the dollar yesterday. Construction PMI climbed from 49.4 to 50.8 for May, showing that the sector returned to growth after months of consecutive contractions. Services PMI is up for release from the U.K. today and a better than expected reading could give the pound a stronger boost above 1.5300. The reading is projected to climb from 52.9 to 53.1.

CHF

USD/CHF moved sideways in yesterday’s trading because of the lack of market catalysts from both the US and Switzerland. The pair cruised around the .9475 handle for almost the entire trading day. There are no major reports from Switzerland today so USD/CHF is likely to take its cues from U.S. data, which are the ADP non-farm employment change and ISM non-manufacturing PMI.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies lost against the dollar in yesterday’s trading, as AUD/USD fell back below the .9700 handle and NZD/USD dipped to .7900. The Australian economy printed weaker than expected growth of 0.6% versus the estimated 0.8% expansion, causing AUD/USD to weaken in the Asian session. Canada is set to print its building permits today and possibly show a 2.3% decline.

By Kate Curtis from Trader’s Way

56

USD

The U.S. dollar continued its winning streak against its major currency rivals, as the U.S. data came in mostly better than consensus. Both Philly Fed index and the existing home sales report beat expectations, with the manufacturing index landing back in the positive region indicating industry expansion. However, initial jobless claims came in worse than estimated, also posting a higher figure compared to the previous week. There are no reports due from the U.S. today so dollar behavior could be dictated by risk flows and market sentiment.

EUR

The euro slid lower against the U.S. dollar, as EUR/USD dipped below the 1.3200 mark briefly. Euro zone PMI figures came in mostly better than expectations, with only the German manufacturing PMI slipping below the estimate. German services PMI made up for this, as the figure landed back above the 50.0 mark, indicating that the industry grew during the month. For today, only the current account and ECOFIN meetings are scheduled for the euro zone, and these aren’t likely to have a huge impact on euro price action.

GBP

The pound lost ground to the dollar, despite the stronger than expected U.K. retail sales figure. Consumer spending increased by 2.1%, much higher than the estimated 0.8% rebound. Against the yen, the pound was able to post some gains. For today, only the public sector net borrowing report is due from the United Kingdom, and the report is slated to print higher borrowing of 12.7 billion GBP. A higher than expected borrowing figure might force the pound move south.

JPY

The Japanese yen had a mixed performance yesterday, as it gained against the commodity currencies but lost ground to the dollar, euro, and pound. There were no reports released from Japan then, which explains why the Asian currency had no clear direction. Today, BOJ Governor Kuroda is set to give a speech, in which he could defend the BOJ’s quantitative easing program.

CHF

USD/CHF rallied at the start of the day, but resistance at .9350 held and pushed the pair right back down. There were no surprises from the SNB monetary policy announcement, as the Swiss central bank simply reiterated its pledge to maintain the franc peg and kept interest rates unchanged. There are no reports due from Switzerland today.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies suffered in yesterday’s trading as the weak Chinese HSBC manufacturing PMI weighed on risk sentiment. AUD/USD continued to tumble below the .9200 handle while USD/CAD edged closer to the 1.0400 mark. There are no reports due from New Zealand or Australia, but Canada is set to print its CPI and retail sales data in today’s U.S. session. Weak data could push USD/CAD to the 1.0400 mark while strong reports could trigger a downside break from the current consolidation.

By Kate Curtis from Trader’s Way

57

USD

Dollar bulls kept charging until the end of the week, spurred by the Fed’s recent announcement regarding its plan to reduce bond purchases by the end of the year. There are no reports due from the United States today, which either suggests quiet trading for most major currency pairs or the possibility of surprise movement from any market event.

EUR

The euro continued to lose ground to the dollar at the end of the week, but managed to post some gains against the Japanese yen. Only the German Ifo business climate report is set for release from the euro zone today and an improvement from 105.7 to 106.00 is expected for June. A higher than expected reading could allow EUR/USD to climb back above the 1.3100 or even 1.3200 area while a poor figure could set off a break below 1.3000.

GBP

The pound sold off heavily against the dollar on Friday but gained against the Japanese yen. There were no major releases from the UK then, although the government did report a smaller than expected public sector net borrowing figure, suggesting that UK finances are improving. There are no releases from the UK today.

CHF

The Swiss franc seems ready to post more losses against the US dollar in the coming trading days as an inverse head and shoulders pattern formed on its 1-hour and 4-hour time frames. There are no reports due from Switzerland today, which suggests that there’s no market catalyst to trigger a break just yet.

JPY

The yen lost ground to its counterparts on Friday after BOJ Governor Kuroda pointed to the prevailing weaknesses in the Japanese economy and how their easing program is helping to address those. This allowed traders to renew confidence in the BOJ’s stimulus program, thinking that further easing could be necessary if the Japanese economy continues to underperform. There are no reports due from Japan today.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies sank to new lows against the US dollar on Friday, with AUD/USD slipping below 0.9200 and USD/CAD breaking above 1.0400. Canadian retail sales came in weaker than expected, as the headline figure showed a mere 0.1% uptick while the core figure printed a 0.3% decline. Canadian CPI also disappointed with a 0.2% headline figure and 0.2% core figure. No reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

58

USD

The US dollar had some trouble sustaining its gains recently, despite stronger than expected data from the US. This may have been a result of an improvement in risk sentiment, which helped lift the higher-yielding currencies against the Greenback. The CB consumer confidence figure posted another record high, as it climbed from 74.3 to 81.4, higher than the estimated 75.2 reading. Meanwhile, new home sales improved from 466K to 476K, higher than the consensus at 462K. Durable goods orders were up by 3.6% and the core version of the report printed a 0.7% uptick instead of staying flat for the month. Today, only the US final GDP figure for the first quarter of the year is set for release, and no revisions are expected from the 2.4% reading.

EUR

The euro was barely able to benefit from ECB head Draghi’s speech, as the central bank governor focused on the existing challenges in the euro zone region. German GfK consumer confidence data is on tap for today and a small improvement from 6.5 to 6.6 is expected. A weaker than expected reading could push EUR/USD deeper below the 1.3100 major psychological level.

GBP

Cable managed to keep its head above the 1.5400 mark in yesterday’s trading, as UK data didn’t disappoint. BBA mortgage approvals rose by 36.1K while the CBI realized sales climbed from -11 to 1, as expected. The events on today’s schedule include BOE Governor King’s speech, the BOE financial stability review, and the government spending review. Given the recent improvement in public sector borrowing, upbeat remarks could be in the cards. If that’s the case, the pound could have a chance at holding on to its recent gains.

CHF

There have been no major reports on Switzerland’s calendar recently, which explains why USD/CHF has been slowly climbing up the charts. The UBS consumption indicator has just been released and it showed an improvement from 1.43 to 1.46, revealing that consumer-based indicators were better in May. No other reports are due from Switzerland today.

JPY

The Japanese yen rebounded against most of its major counterparts recently, as USD/JPY tested 97.00 while EUR/JPY found resistance around 128.00. There have been no major releases from Japan over the past 24 hours and none are due for the next trading sessions, suggesting that yen pairs could move to the tune of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar and New Zealand dollar recovered slightly against the Greenback yesterday when the People’s Bank of China tried to reassure markets that a credit crunch won’t take place in China. AUD/USD climbed to the 0.9300 area while NZD/USD held on to the .7750 mark. As for USD/CAD, the pair continued to rally to the 1.0500 mark. No reports are due from the comdoll economies, other than the New Zealand trade balance in the next Asian session.

By Kate Curtis from Trader’s Way

59

USD

The US dollar lost ground to some of its major counterparts in yesterday’s trading as the US Q1 2013 final GDP figure suffered a huge downward revision from 2.4% to just 1.8%. This led market participants to worry that the US economy would do even worse when the stimulus measures are reduced. Up ahead, the core PCE price index and personal income and spending data are due. The Fed is watching inflation closely and it is rumored that the core PCE price index is their preferred measure. Meanwhile, the consumer sector is seen to be the backbone of growth in the US so improved personal spending and income figures could provide support for the dollar.

EUR

The euro weakened again in yesterday’s trading, as ECB President Draghi reiterated that the ECB is ready to adjust monetary policy if necessary. However, the GfK consumer climate did show an improvement from 6.5 to 6.8, showing that consumer confidence is still doing well in euro zone’s largest economy. For today, the biggest mover on euro zone’s schedule is the German unemployment change report which could show a 7K increase in joblessness. This is lower than the previous 21K rise in unemployment, suggesting that there is some recovery in the German labor market.

GBP

The pound sold off heavily against its counterparts when the BOE financial stability report showed that there is a huge danger posed by the volatility in bond yields. Apparently, the central bank believes that this points to a potential increase in borrowing costs, which would make mortgages more expensive. In addition, the UK government announced a fresh batch of spending cuts in its recent spending review. An additional 11.5 billion GBP in austerity measures, which includes the removal of the automatic annual salary increase for public sector workers and caps on welfare spending, would be implemented starting 2015. Current account and final GDP figures are due from the UK today.

CHF

The Swiss franc continued to weaken against the Greenback, as USD/CHF broke above the .9400 handle. Only the SNB quarterly bulletin is on tap from Switzerland today and it isn’t likely to cause a huge move among franc pairs.

JPY

The yen regained strength against most of its major counterparts as risk aversion came into play yesterday. However, USD/JPY managed to hold on to the 97.80 area while GBP/JPY is currently trading below 150.00. There are no major reports due from Japan today as traders await the release of Japanese inflation reports for tomorrow.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to sneak in some gains yesterday, as AUD/USD tested the .9300 area while USD/CAD retreated from 1.0500. This recovery was spurred by a drop in Chinese interbank lending rates, squashing fears that a credit crunch is taking place. In Australia, Prime Minister Julia Gillard was ousted by rival Kevin Rudd. No major reports are due from these economies today.

By Kate Curtis from Trader’s Way

60

USD

The US dollar dominated the day’s price action once more, as strong economic data boosted the currency against its counterparts. The initial jobless claims printed better than expected results while the core PCE price index, which is considered to be the Fed’s preferred inflation gauge, showed a 0.1% increase. In addition, personal income and spending both posted gains. Speeches by Fed officials showed that they support the central bank’s plans to taper stimulus at the end of the year but reiterated that this is still dependent on data. For today, the Chicago PMI and the revised UoM consumer sentiment index are due. Strong figures could continue to lift the US dollar.

EUR

The euro managed to hold steady above the 1.3000 major psychological level in yesterday’s trading sessions. German unemployment declined by 12,000 effectively bringing the unemployment rate from 6.9% to 6.8%. This was better than the estimated increase of 8,000 in joblessness. For today, German retail sales are due and an upside surprise could be likely, given the improvement in its labor market. German preliminary inflation is also on tap and an increase of 1.7% is expected.

GBP

GBP/USD edged close to the 1.5200 major psychological support in yesterday’s trading, before bouncing back above 1.5250. The UK current account was weaker than expected as it showed a larger deficit of 14.5 billion GBP instead of the estimated 11.9 billion GBP deficit. Only the Nationwide HPI is set for release from the UK and an increase of 0.4% in house prices is expected.

CHF

The Swiss franc posted huge losses against the euro while it struggled to hold steady against the dollar around .9450. The SNB quarterly bulletin emphasized the points made during the central bank’s monetary policy decision earlier during the month. For today, the KOF economic barometer is due and it is expected to improve from 1.10 to 1.21, indicating a better economic outlook for the next six months.

JPY

The yen lost ground to most of its major counterparts during the European and US sessions, although it did show signs of strength during the Asian session. There were mixed reports released from Japan earlier today, as the Tokyo CPI came in line with expectations while retail sales beat expectations. However, unemployment ticked higher for the month to 4.1%. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies fought hard to stay afloat against the US dollar, as AUD/USD climbed back above the .9300 handle briefly while NZD/USD moved sideways. Canada is set to print its monthly GDP report and show a 0.1% economic expansion for May. A weaker than expected report could push USD/CAD higher up the charts.

By Kate Curtis from Trader’s Way

61

USD

The US dollar has a lot of major reports in line for the week, with the ISM manufacturing PMI, ISM non-manufacturing PMI, and NFP report due. Last week, dollar demand was strong as most of the data came in stronger than expected. Another round of upbeat figures from the US would mean that the Fed is moving closer to tapering its bond purchases and that the US economy could stay on its feet even with less stimulus. The ISM manufacturing PMI on tap for today is slated to show an improvement from 49.0 to 50.6, showing that the sector rebounded back to expansion for June.

EUR

The euro tested the 1.3000 handle against the dollar last week, and today’s top-tier data could determine if the pair will bounce or break. Only medium-tier reports such as Italian PMI and CPI estimate are due from the euro zone today, which suggests that EUR/USD performance could be more impacted by US data. However, significantly weak data from the euro zone could trigger an early break below the 1.3000 mark.

GBP

The pound could have a chance to rebound against the dollar today as the UK will print its manufacturing PMI. The figure is projected to hold steady at 51.3 but an upside surprise could lift the pound against its counterparts. Data from the UK has been more or less strong recently, which could increase the odds for better than expected results.

CHF

The Swiss franc weakened against the Greenback on Friday, mostly because of the strong dollar bias. The SVME PMI is due from Switzerland today and the report could print an improvement from 52.2 to 52.5, indicating that the manufacturing sector posted a stronger expansion. A weaker than expected result could worsen the ongoing franc selloff.

JPY

The yen had a mixed performance on Friday, as it weakened against the dollar and strengthened against the Aussie. It managed to consolidate against the euro and the pound. Data from Japan has been mostly stronger than expected, save for the household spending report, which showed a 1.6% decline. The Tankan figures released earlier today came in strong, posting an improvement for both manufacturing and non-manufacturing sectors.

Commodity Currencies (AUD, CAD, NZD)

The comdolls edged slowly lower on Friday, as though the recent selloffs were starting to get exhausted. China printed its HSBC final manufacturing PMI and official government PMI for June and both came in line with expectations. The government PMI fell from 50.8 to 50.1 while the HSBC figure was revised slightly down from 48.3 to 48.2. Canadian banks are on a holiday and there are no other reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader’s Way