Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
585

[B]USD[/B]

The US dollar was able to recover at the start of the week, thanks to the downturn in commodity prices and the return in risk aversion. There were no major reports out of the US economy, as it seems that market participants are just bracing themselves for a rate hike next week.

[B]EUR[/B]

The euro returned some of its recent wins to the dollar as data from the region came in weak. Germany printed a 0.2% increase in industrial production, lower than the projected 0.8% gain, while the Sentix investor confidence index came up short of expectations. Only low-tier reports are due from the euro zone today.

[B]GBP[/B]

The pound struggled to hold on to its gains as investors appear to be pricing in more downbeat remarks from the BOE later on this week. There were no reports out of the UK yesterday while today has the Halifax HPI and manufacturing production lined up. Weak data could set the tone for a cautious BOE statement and MPC minutes on Thursday.

[B]CHF[/B]

The franc made its way back to the 1.0000 level against the dollar, but this area appears to be holding as support ahead of the SNB decision later this week. The Swiss central bank might announce intervention efforts or at least jawbone the currency since the ECB already ramped up their stimulus plan. The foreign currency reserves showed a bump up from 552B to 563B CHF.

[B]JPY[/B]

The yen took advantage of the run in risk aversion to recover against its forex rivals but it was still no match to dollar strength. Traders are waiting on the release of Japan’s current account balance and final GDP reading today, which might show a positive revision from -0.2% to +0.1%.

[B]Commodity Currencies (AUD, NZD, CAD)[/B]

The comdolls got slammed in today’s trading sessions, as WTI crude oil fell below $40/barrel and iron ore fell to record lows. There were no major reports out of the comdoll economies yesterday while today has the Australian NAB business confidence index and Chinese trade balance on tap. Canadian housing starts and building permits data are also due, along with a speech by BOC Governor Poloz.

[I]By Kate Curtis from Trader’s Way[/I]

586

USD

The US dollar was slightly weaker on the day, possibly due to the JOLTS job openings decline. The figure dropped from 5.53M to 5.38M instead of improving to the projected 5.59M reading. US crude oil inventories data is due today, but this could have a stronger impact on the Canadian dollar than the Greenback.

EUR

The euro enjoyed a return in bullish momentum following a day of consolidation after the ECB statement. Data from the region was actually weaker than expected, but it looks like traders are pricing in better economic performance later on since the ECB lowered deposit rates last week. Only the German trade balance is lined up today.

GBP

The pound was in a weak spot after the UK manufacturing production report showed a 0.4% decline, worse than the projected 0.1% drop. The Halifax HPI was also weaker than expected with a 0.1% drop instead of the expected 0.3% uptick.

CHF

The franc advanced against most of its peers, trailing the euro in today’s trading sessions. There were no reports out of Switzerland yesterday and only the unemployment rate is due today. This could show a steady reading of 3.4%, which might support the franc ahead of the SNB decision later on.

JPY

The yen was a big winner during the risk-off environment, as its lower-yielding US dollar rival was weighed down by downbeat jobs indicators. Medium-tier data from Japan, namely the current account balance and Economy Watchers sentiment index, were weaker than expected but the final GDP reading was upgraded from -0.1% to 0.3%. Japanese core machinery orders data is due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still on weak footing, with the Loonie losing ground the most. BOC Governor Poloz mentioned in his latest testimony that the central bank has more policy tools to use more than zero interest rates, such as negative deposit rates or asset purchases. This kind of forward guidance drove the Loonie much lower, as oil prices didn’t show any signs of bottoming out. Chinese CPI data is due and a rise from 1.3% to 1.4% is expected. The RBNZ decision is coming up and some are expecting a 0.25% cut.

By Kate Curtis from Trader’s Way

587

USD

The US dollar had a mixed performance, as it gave up ground to the yen, euro, pound and Kiwi but managed to stay strong against its other rivals. There have been no major reports out of the US, leaving risk sentiment as one of the major drivers of price action. Today has the initial jobless claims and import prices data on tap.

EUR

The euro continued to advance against the dollar but was slightly weaker against its other counterparts. Data from the euro zone was still better than expected, with Germany reporting a larger than expected trade surplus of 20.8 billion EUR versus the projected 19.2 billion EUR surplus. French jobs data, CPI, and industrial production numbers are on tap for today and another round of upbeat numbers could spur more euro rallies.

GBP

The pound managed to stay afloat when the UK FPC upgraded their forecasts for the economy. Up ahead, the BOE interest rate statement and MPC minutes are on the docket and this might trigger more volatility for pound pairs. The central bank sounded dovish in their previous statement and might reiterate their cautious outlook this time.

CHF

The franc continued to trail the euro and advance against some of its forex counterparts, as risk aversion stayed in play. The Swiss jobless rate held steady at 3.4% as expected, which suggests that the SNB might not sound to dovish in their upcoming statement. Still, any downbeat remarks or currency jawboning now that the ECB has eased policy might be in the works.

JPY

The yen was the biggest winner in the risk aversion game, as improving Japanese fundamentals led the currency to be the more preferred safe-haven. Japanese core machinery orders jumped by 10.7% instead of falling by 1.5%, setting the tone for stronger manufacturing conditions. Japan’s PPI is up for release today and a 3.8% decline is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took a break from their recent tumble when the US crude oil inventories report showed a drop in stockpiles, easing fears of an oversupply. The RBNZ decided to cut rates by 0.25% as expected but suggested that this might be the last of their rate cuts since they expect growth to pick up by next year. Australia’s jobs report is due next and a 10K drop in hiring is eyed.

By Kate Curtis from Trader’s Way

588

USD

Data from the US economy came in mixed today, as the initial jobless claims report posted a downside surprise of 282K in claimants while import prices indicated a smaller than expected 0.4% drop versus the projected 0.8% decline. For today, the retail sales report is up for release and the headline figure is slated to show a 0.2% gain while the core figure could show a 0.3% increase.

EUR

The euro managed to resume its climb in recent trading sessions, even though data from the region came in mixed. French non-farm payrolls and CPI numbers fell short of expectations but the industrial production report surprised to the upside. More medium-tier reports such as German final CPI and Italian industrial production data are due next.

GBP

The pound managed to breathe a sigh of relief after the BOE maintained its cautious stance instead of shifting to a more dovish one. The central bank kept rates and asset purchases at their current levels while one policymaker still voted to hike rates. UK construction output and consumer inflation expectations are due next.

CHF

The franc was also able to regain ground after the SNB interest rate decision since the central bank refrained from lowering deposit rates or intervening in the forex market for now. Still, SNB head Jordan reiterated that the franc is significantly overvalued and that they have enough policy options left. There are no reports due from the Swiss economy today.

JPY

The yen gave up some ground in recent trading sessions as commodity prices recovered and risk appetite had a bit of a rebound. Data from Japan came in mixed, as the BSI manufacturing index fell short of expectations but the PPI improved from -3.8% to -3.6%. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie got a break from its tumble when Australia printed an incredibly strong jobs report. The economy added 71.4K jobs in November instead of posting the projected 10K in losses. However, the reliability of the report has been questioned for quite some time so the gains weren’t sustained. No other reports are due from the commodity currencies today.

By Kate Curtis from Trader’s Way

589

USD

The US dollar had a mixed performance, although it was generally weaker against most of its peers with traders lightening up on their long positions ahead of the FOMC statement later on. No reports were released from the US yesterday while today has the Empire State manufacturing index lined up. A climb from -10.7 to -5.7 is eyed, but a drop could spur more dollar weakness. Also due are the CPI readings for November.

EUR

The euro continued to move sideways against the lower-yielding currencies but gave up ground to the commodity currencies. Data from the euro zone was stronger than expected, with industrial production up by 0.6% versus the projected 0.3% gain. ZEW economic sentiment figures are lined up for today, with the German reading expected to rise from 10.4 to 15.2.

GBP

The pound was in a weak spot against its peers, as traders are pricing in expectations for a downbeat jobs report on Wednesday. The UK Rightmove HPI indicated a 1.1% fall in prices, following the previous 1.3% slump. UK CPI is due today and a 0.1% increase in the headline figure is expected.

CHF

The franc continued to advance against the dollar, even though there were no major reports out of the Swiss economy. Today has the PPI on tap and a 0.1% uptick in producer prices is eyed.

JPY

The yen gave up some of its recent gains when the Tankan survey results beat expectations and brought risk appetite back to the table. The manufacturing component held steady at 12 instead of falling to 11 while the non-manufacturing component also held steady at 25. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a strong start as commodity prices bounced back at the start of the week. There were no reports out of the comdoll economies while today has the RBA minutes on tap. Also coming up is Canada’s manufacturing sales data and New Zealand’s dairy auction.

By Kate Curtis from Trader’s Way

590

USD

The US dollar was able to bounce back against its peers when data came in mostly in line with expectations. The headline CPI stayed flat in November while the core version of the report showed a 0.2% uptick. The Empire State manufacturing index rose from -10.7 to -4.6, higher than the projected climb to -5.7 reading. For today, all eyes and ears are on the FOMC statement, as a rate hike might be accompanied by cautious remarks.

EUR

The euro was hit by a fresh round of selling pressure later in the day, even though the shared currency drew a bit of support from upbeat data. The German ZEW index rose from 10.4 to 16.1, higher than the estimated 15.2 reading, but the region’s figure fell short of expectations. Flash PMI readings from Germany and France are set to drive euro price action today.

GBP

The pound bounced upon seeing its CPI readings come in line with expectations but eventually gave up ground to its counterparts later on. The headline CPI showed a 0.1% uptick while the core CPI rose from 1.1% to 1.2%. The UK jobs report is up for release today and a 0.9K increase in claimants is eyed, enough to keep the unemployment rate steady at 5.3%, but the average earnings index is set to drop from 3.0% to 2.5%.

CHF

The franc also gave up ground in recent trading sessions even though the Swiss PPI beat expectations and showed a 0.4% gain. The Swiss ZEW expectations report is up for release today and any improvements from the previous 0.0 reading could keep the currency supported.

JPY

The yen took its cue from risk aversion since there were no reports out of Japan. Fortunately for the lower-yielding currency, risk-off flows were seen during the later sessions as traders probably liquidated their holdings ahead of the FOMC statement. The Japanese flash manufacturing PMI is still due before then and a rise from the previous 52.8 figure could mean more gains for the yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls caved to the dollar but managed to advance against the European currencies. New Zealand’s dairy auction showed a 1.9% rise in prices, slower than the previous 3.6% gain but still an increase nonetheless. Canada reported a worse than expected 1.1% slump in manufacturing sales but the Loonie was able to get a boost from BOC Governor Poloz’s reassuring speech. New Zealand’s Q3 GDP is up for release next.

By Kate Curtis from Trader’s Way

591

USD

The Fed increased rates by 0.25% as expected, upgrading growth and employment forecasts for 2016 as well. Although they downgraded their PCE inflation estimates for next year, Fed head Yellen still showed confidence in US fundamentals. In terms of data, industrial production, capacity utilization, and the flash manufacturing PMI all missed expectations. The Philly Fed index, initial jobless claims, and current account balance are up for release next.

EUR

Data from the euro zone came in mostly in line with expectations, as some figures even surprised to the upside. France printed a higher than expected manufacturing PMI but its services PMI missed the mark. Meanwhile the euro zone final CPI reading enjoyed an upgrade from 0.1% to 0.2%. The German Ifo business climate index is due today and a rise from 109.0 to 109.2 is eyed.

GBP

The pound was in a weak spot when the UK jobs report came in mostly weaker than expected. Even though the jobless rate dropped to new lows at 5.2%, claimants rose by 3.9K versus 0.9K while the average earnings index fell from 3.0% to 2.4% versus the projected 2.5% reading. Up ahead, the retail sales report is slated to show a 0.6% rebound.

CHF

The franc moved mostly sideways throughout the day as traders waited for the FOMC announcement. Data from Switzerland showed an improvement as the ZEW economic expectations index rose from 0.0 to 16.6. SECO economic forecasts are up for release today.

JPY

The yen continued to give up some of its recent wins when risk appetite returned to the markets. Japan’s flash manufacturing PMI dipped from 52.6 to 52.5, which still indicated an industry expansion. Japan’s trade balance is due today and the BOJ monetary policy statement is lined up for Friday.

Commodity Currencies (AUD, NZD, CAD)

The Loonie chalked up another round of losses when oil prices resumed their slide. US crude oil inventories rose by 4.6 million barrels instead of showing the estimated drop of 0.3 million barrels. Data from Canada was actually better than expected as foreign securities purchases picked up. New Zealand’s GDP came in at 0.9% for Q3, higher than the previous 0.4% growth figure.

By Kate Curtis from Trader’s Way

592

USD

The US dollar is on relatively strong footing this week, especially since the Fed recently started its rate hike cycle and data from the US came in mostly stronger than expected. The ISM manufacturing PMI is up for release today and a rise from 48.6 to 49.1 is eyed. Stronger than expected data could mean more gains for the dollar, especially if the jobs component indicates a gain.

EUR

The euro is struggling to stay afloat ahead of event risks this week, as another round of bleak data could spur expectations of additional ECB easing. For today, the German preliminary CPI and Spanish manufacturing PMI is lined up while tomorrow has the euro zone flash CPI estimates.

GBP

The pound suffered a sharp selloff at the start of this week’s trading, with traders likely pricing in downbeat reports from the UK. The manufacturing PMI is due today and a small rise from 52.7 to 52.8 is expected. Net lending to individuals and mortgage approvals data are also lined up.

CHF

The franc is coming off a very weak performance last week and has gapped lower against most of its peers at the start of Monday’s trading. Swiss manufacturing PMI is due today and a rise from 49.7 to 50.2 is eyed, likely providing a bit of support for the Swiss currency.

JPY

Data from Japan came in mixed over the past couple of weeks but the yen is currently being weighed down by the BOJ’s surprise decision to expand its ETF purchase program. The national core CPI printed a flat reading while household spending and retail sales indicated sharper than expected declines.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start this week when China printed a weaker than expected manufacturing PMI from Caixin. The government figures released last week indicated small improvements but traders appear to be placing more credibility on the non-official figures. Australian commodity prices are due next and the New Zealand GDT auction is scheduled tomorrow.

By Kate Curtis from Trader’s Way

593

USD

The US dollar was able to draw support from the run in risk aversion although it paled in comparison to the Japanese yen. The ISM manufacturing PMI turned out to be a disappointment as the reading fell from 48.6 to 48.2 instead of improving to the projected 49.1 figure. There are no major reports due from the US economy today.

EUR

The euro was able to pare its losses against its counterparts, except for the dollar and the yen, when data from the euro zone came in mostly stronger than expected. Although the German preliminary CPI came in below expectations with a 0.1% decline, the Italian manufacturing PMI surprised to the upside while other PMI readings from the top economies came in line with expectations. Euro zone CPI estimates and German unemployment change data are lined up.

GBP

The pound was in a weak spot yesterday after the UK printed a downbeat manufacturing PMI reading. The index fell from 52.5 to 51.9 instead of improving to the estimated 52.8 figure, reflecting a slower pace of expansion. The construction PMI is due today and a rise from 55.3 to 56.1 is expected but this might have a minimal impact on pound movement.

CHF

The franc managed to score some gains when the Swiss manufacturing PMI beat expectations. The reading rose from 49.7 to 52.1, outpacing the consensus at 50.2 to indicate a much stronger pace of industry expansion. There are no reports out of Switzerland today.

JPY

The yen was able to benefit from the downturn in global equities, as the selloff in Asian stock markets boosted the yen’s safe-haven appeal. Japan’s final manufacturing PMI was revised from 52.5 to 52.6. There are no reports due from Japan today, leaving risk sentiment in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls suffered sharp losses at the start of the week when China’s Caixin manufacturing PMI came in below expectations. Traders also priced in their expectations for further stock declines ahead of the expiration of the six-month ban on short-selling. The New Zealand GDT auction is scheduled later today and another decline in dairy prices could mean more losses for the Kiwi.

By Kate Curtis from Trader’s Way

594

USD

The US dollar continued to rake in gains during Tuesday’s trading sessions since risk aversion stayed in play. Data from the US economy was once again weaker than expected, with total vehicle sales declining from 18.2 million to 17.3 million in December. For today, the ADP non-farm employment change report is due and a 193K increase is eyed, weaker than the previous 217K gain.

EUR

The euro was in a very weak spot after the release of weaker than expected CPI estimates, as this led some analysts to price in more dovishness from the ECB. The headline CPI estimate came in at 0.2% instead of 0.4% while the core version stood at 0.9% instead of improving to the projected 1.0% figure. In addition, some of the top economies announced negative revisions for their growth forecasts. On a more upbeat note, the German unemployment change report came in better than expected with a 14K reduction in joblessness. Services PMI readings from the region’s top economies are due today.

GBP

The pound barely made any gains after seeing stronger than expected construction PMI data since traders are paring their holdings ahead of today’s services PMI release. Analysts are expecting to see a drop from 55.9 to 55.6 to indicate a slower pace of industry expansion, although stronger than expected data could yield stronger gains for the pound.

CHF

The franc took its cue from the euro and slid lower against its forex peers, as there were no reports from Switzerland to keep the currency supported. There are still no reports lined up from the Swiss economy today so it might continue to trail the euro and be sensitive to market sentiment.

JPY

The yen scored another winning day, thanks to risk aversion extending its stay in the financial markets. There were no reports out of Japan then and none are due today, although the Japanese currency is off to an early strong start during the Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi seem to be gearing up for another losing day since the Chinese Caixin services PMI came in weaker than expected and spurred another drop in risk-taking. In addition, the dairy auction in New Zealand resulted to a 1.6% fall in dairy prices. In Canada, underlying inflation data also came in below expectations. The Canadian trade balance and crude oil inventories report are due next.

By Kate Curtis from Trader’s Way

595

USD

The US dollar had a mixed performance as it advanced to the commodity currencies and pound but gave up ground to the yen and the euro. Data from the US economy was also mixed, with the ADP report printing strong results and the ISM non-manufacturing PMI falling short. Factory orders fell by 0.2% as expected while the trade balance showed a smaller deficit, although this was caused by drops in both imports and exports. The initial jobless claims report is due today.

EUR

The euro managed to recoup some of its losses even as the services PMI readings from its top economies came in mixed. German factory orders and retail sales data are due today and small gains are eyed, with stronger than expected results likely to boost the shared currency.

GBP

The pound was still in a weak spot even as the services PMI came in closely in line with expectations. The figure fell from 55.9 to 55.5 in December, slightly lower than the estimated 55.6 reading but still reflective of a slower pace of industry growth. Only the Halifax HPI is due from the UK today.

CHF

The franc took its cue from the euro and regained ground against most of its counterparts, even though there were no reports out of Switzerland yesterday. Swiss foreign currency reserves data are up for release today and a sharp gain could suggest that the SNB is starting to intervene in the currency markets once more.

JPY

The yen continued to rake in gains on the risk-off market environment, chalking up its largest wins to the commodity currencies. There were no reports out of the Japanese economy yesterday and none are due today, indicating that risk sentiment could stay in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to lose ground as risk aversion stayed in the financial markets. Not even the decline of 5.1 million barrels in crude oil inventories was enough to keep oil and the Loonie afloat, as traders focused on the buildup in other energy resources. In Australia, building approvals came in much weaker than expected while the trade balance came in line with expectations. A speech by BOC Governor Poloz is lined up, along with the Ivey PMI which might fall from 63.6 to 56.7.

By Kate Curtis from Trader’s Way

596

USD

The US dollar gave back some of its wins to its rivals, particularly the European currencies, when US equities also tumbled on risk aversion. The S&P 500 and Nasdaq closed roughly 3% lower for the day, as investors worried that higher borrowing costs would make it more difficult for companies to stay profitable when global demand weakens. Data from the US came in slightly worse than expected but traders appear to be waiting for the NFP release today, which might show a 203K gain in hiring for December.

EUR

The euro managed to stay resilient amid the downturn in global markets, advancing against the dollar, yen, and pound. Data from the region has been mixed, as Germany printed an impressive 1.5% rise in factory orders and a weaker than expected 0.2% uptick in retail sales. Germany and France are set to print their industrial production and trade balance numbers today.

GBP

The pound gave up more ground but managed a feeble rebound towards the end of the day, as cash flows away from China to the UK buoyed demand for the currency. The Halifax HPI report showed a 1.7% rise in home prices, stronger than the projected 0.5% gain. The UK trade balance is due today and a smaller deficit of 10.5 billion GBP is eyed.

CHF

The franc erased some of its recent losses as the Swiss economy also enjoyed increased safe-haven flows. Swiss foreign currency reserves actually declined from 563B CHF to 560B CHF, suggesting that the SNB is holding its fire. Switzerland’s jobless rate is due today and no change from the previous 3.4% reading is expected.

JPY

The yen still advanced against most of its peers but returned some of its recent wins to the euro. There were no major reports out of Japan yesterday but the currency is enjoying support from all the risk-off moves in the Asian markets. Only the leading indicators report is up for release today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls went on yet another leg lower but were able to bounce back before the US markets closed. Canada’s Ivey PMI turned out to be a huge disappointment as it reflected industry contraction at 49.9 and today’s jobs data might yield another set of losses for the Loonie. Analysts are expecting to see a 10.4K rebound in hiring, which might be enough to keep the jobless rate unchanged at 7.1%.

By Kate Curtis from Trader’s Way

597

USD

The US dollar raked in some gains after seeing upbeat jobs data but was still in a weak spot against the European currencies and the Japanese yen. The economy added 292K jobs in December, higher than the projected 203K increase, while previous upward revisions added 50K in hiring gains. Average hourly earnings were flat, indicating that there was no wage growth seen. Only the labor market conditions index is due from the US today.

EUR

The euro managed to advance against most of its forex counterparts on Friday, despite weaker than expected data from the euro zone. German industrial production fell by 0.3% while French industrial production was down by 0.9%. The euro zone Sentix investor confidence index is up for release today and a drop from 15.7 to 11.5 is eyed.

GBP

The pound was still in a weak spot against most of its rivals even though the UK trade balance came in line with expectations of a 10.5 billion GBP deficit. There are no reports due from the UK economy today.

CHF

The franc took its cue from the euro and advanced against most of its counterparts. Data from Switzerland was weaker than expected, as the CPI fell by 0.4% instead of showing the projected 0.2% dip. Swiss retail sales data is due today and a 0.3% rebound is eyed.

JPY

The yen carried on with its risk-off rallies, particularly against the commodity currencies. Japanese banks are closed for a holiday today but the yen is drawing support from downbeat Chinese data released over the weekend, with the CPI falling short of expectations and the PPI showing further downside price pressures down the line.

Commodity Currencies (AUD, NZD, CAD)

The comdolls started the week on a downbeat note, as traders speculated that further weakness could be seen from China. The CPI rose from 1.5% to 1.6%, short of the projected 1.7% figure, while the PPI indicated a 5.9% year-over-year slide as expected. In Canada, the jobs report showed a 22.8K gain in hiring which was mostly a result of part-time employment. In Australia, ANZ job advertisements fell by 0.1%.

By Kate Curtis from Trader’s Way

598

USD

The US dollar returned some of its recent wins to the commodity currencies but regained ground to the euro and the Japanese yen. Data from the US economy was actually stronger than expected, as the labor market conditions index ticked higher, but Fed official Lockhart’s remarks downplayed the odds of a March Fed rate hike. According to him, the committee would need more inflation data and strong evidence that the 2% target would be achieved. FOMC member Fischer is set to give his testimony today.

EUR

The euro gave up some ground to the dollar and some of its comdoll counterparts when profit-taking took place. The euro zone Sentix investor confidence index came in below expectations as it slipped from 15.7 to 9.6, lower than the estimated drop to 11.5. There are no reports due from the euro zone today.

GBP

The pound struggled to hold its ground against its forex peers as there were no major reports out of the UK. Traders appear to be playing it safe ahead of the BOE statement and MPC minutes lined up later this week, as more dovish remarks are expected.

CHF

The franc was weaker in yesterday’s trading sessions, as the Swiss retail sales report turned out to be a huge disappointment. Consumer spending was down 2.1% year-over-year instead of showing the projected 0.3% uptick while the previous reading was revised to show a sharper 1.1% decline. There are no reports due from Switzerland today.

JPY

The yen retreated against some of its forex peers as Japanese traders were out on a holiday. Data from Japan came in weaker than expected, with the trade surplus narrowing from 1.49T JPY to 1.42T JPY. Consumer confidence and the Economy Watchers sentiment index are lined up today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi managed to bounce back yesterday after the Chinese authorities intervened in the markets to keep the yuan afloat. However, the Canadian dollar was unable to join the rally since oil prices fell to the $31/barrel levels yesterday. ANZ reported that job advertisements fell 0.1% in Australia and that commodity prices were down by 1.8% in New Zealand, adding potential downside in the coming days.

By Kate Curtis from Trader’s Way

599

USD

The US dollar had a mixed performance lately, as the lack of top-tier catalysts left it functioning as a counter currency instead of driving any directional moves. According to FOMC member Fischer, the US central bank stands ready to make adjustments if any issues arise during the normalization process. For today, the US Beige Book and federal budget balance are up for release, along with the latest crude oil inventories report.

EUR

The euro was unable to make a lot of headway in recent trading sessions since there were no major reports out of the euro zone yesterday. Today has the French CPI and euro zone industrial production data on tap, with stronger than expected data likely to spur another round of gains for the shared currency.

GBP

The pound was the weakest of the major currency bunch yesterday since data from the UK came in much weaker than expected. Manufacturing production fell by 0.4% in November instead of rising by 0.1% while industrial production was down by 0.7% instead of coming in flat. There are no reports due from the UK today, allowing traders to price in expectations ahead of the BOE statement on Thursday.

CHF

The franc also gave up ground against its forex counterparts even though there were no major reports out of Switzerland. Data such as retail sales and CPI have been weaker than expected recently, which is probably traders are eager to let go of their franc holdings. There are no major reports due today.

JPY

The yen managed to hold on to its recent wins even with the slight pickup in in risk sentiment during the latter trading sessions. There were no reports out of Japan in today’s Asian session but core machinery orders and PPI readings are coming up in the next one.

Commodity Currencies (AUD, NZD, CAD)

The Canadian dollar dropped to fresh lows against the US dollar when oil prices tumbled to $30/barrel. The EIA revised its production forecasts lower for this year and the next while keeping US demand estimates unchanged. Rumors that the OPEC is mulling an emergency meeting to cut production and boost prices were quickly quashed by UAE leaders, putting additional downward pressure on the commodity. In contrast, AUD and NZD drew a bit of support from strong Chinese trade balance figures, as imports fell less than expected while exports actually picked up by 2.3%.

By Kate Curtis from Trader’s Way

600

EUR/USD: Looks to be bearish

In the US, consumer confidence edged up in January, as the IBD/TIPP Economic Optimism Index posted a reading of 47.3 vs. 47.2 in December. The NFIB business optimism index also edged higher, reaching 95.2 in December from a previous 94.8, although missing expectations of 95.4.

The ECB’s last meeting revealed the likelihood of a softer extension of QE. There could likely be a break below 1.0800.

USD/JPY: Further downward exhaustion signalled

In the 1-hour chart for the USD/JPY, it can be seen that the price is not going over the 100 SMA. So upside might be limited in the short term. As far as the technical indicators are concerned, they are turning lower around their mid-lines. It looks to be in bearish territory.

601

USD

The US dollar had a mixed performance, as it resumed its rally against the commodity currencies but gave up ground to the euro and franc. Fed official Evans reiterated that tightening should proceed at a gradual pace while the Beige Book noted that the inflation outlook is still grim. For today, initial jobless claims and a speech by FOMC member Bullard are due.

EUR

The euro rallied against most of its currency counterparts even though data from the region came in mixed. French CPI was stronger than expected at 0.2% versus the projected 0.1% uptick while the region’s industrial production reading fell short of expectations with a 0.7% decline versus the projected 0.2% dip. Italian industrial production and German WPI figures are due, but the bigger catalyst could be the ECB meeting minutes.

GBP

The pound continued to sell off against its peers despite the lack of top-tier data from the UK, as investors are probably pricing in expectations ahead of the BOE statement. The central bank is expected to reiterate their downbeat outlook, mostly due to the slump in oil prices and the slowdown in China.

CHF

The franc took its cue from the euro and rebounded in recent trading sessions even though there were no actual reports out of Switzerland. There are still no reports up for release from the Swiss economy today.

JPY

The yen regained ground against its rivals after sliding slightly lower due to profit-taking and a pickup in risk appetite over the past few days. Data from Japan was weaker than expected, as core machinery orders fell by 14.4% while the PPI posted a sharper than expected 3.4% fall in producer prices. Preliminary machine tool orders data is still up for release.

Commodity Currencies (AUD, NZD, CAD)

The comdolls resumed their slide despite a smaller than expected increase in crude oil inventories and stronger than expected jobs data from Australia. Hiring fell by 0.1K in December, better than the projected 11K decline, while the previous reading enjoyed an upward revision. Even so, the Australian dollar was unable to gain much traction. There are no other reports lined up from the comdoll economies for the rest of the day.

By Kate Curtis from Trader’s Way

602

USD

The US dollar had a generally stronger performance throughout the day, especially after US equities kicked off the session with a strong start. Data from the US economy came in mixed, as import prices showed a smaller than expected 1.2% drop while initial jobless claims were higher than expected. FOMC member Bullard reiterated that it may take longer for the US to achieve its 2% inflation target than initially anticipated. US retail sales, PPI, and consumer sentiment data are up for release today.

EUR

The euro managed to stay resilient against most of its peers even as the minutes of the ECB meeting shed more light on why policymakers expanded their stimulus program. Only the euro zone trade balance is up for release today and a strong figure could mean more gains for the shared currency.

GBP

The pound remained one of the weakest currencies of the bunch when the BOE statement took place. The UK central bank reminded traders that the fall in oil prices has spurred a weaker inflation outlook and that it may take longer for them to decide to increase interest rates. Still, the BOE kept policy unchanged for now.

CHF

The franc was able to hold on to some of its recent wins even though there were no top-tier reports out of Switzerland. There are still no major reports lined up today so the franc could take its cue from the euro and market sentiment.

JPY

The Japanese yen returned some of its wins when risk appetite picked up and commodity prices rebounded. Data from Japan was weaker than expected, with core machinery orders, preliminary machine tool orders, and PPI all falling short of expectations. No reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were off to a weak start but managed to recoup their losses or consolidate later on when commodities rebounded. WTI crude oil climbed back above $31/barrel but it remains to be seen whether it can hold its ground or not. In Australia, employment data came in better than expected with a 0.1K drop in hiring versus the projected 11K decline. Earlier today, Australia reported a 1.8% jump in home loans instead of the projected 0.4% drop. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

603

USD

US economic data came in mixed last Friday, although the numbers were mostly weaker than expected. Headline retail sales fell by 0.1% as expected while core retail sales dropped by 0.1%. The headline PPI showed a 0.2% dip in producer prices while the core figure posted a 0.1% uptick. The Empire State manufacturing index was a huge disappointment as it fell deeper into industry contraction but consumer sentiment improved, according to the preliminary index released by the University of Michigan. US equity indices were down 2% on Friday ahead of today’s Martin Luther King, Jr. holiday.

EUR

The euro managed to stay resilient amid the bloodbath among higher-yielding assets last Friday. The region’s trade balance was better than expected at a surplus of 22.7 billion EUR versus the projected 21.1 billion EUR surplus. Only the Italian trade balance is up for release today.

GBP

The pound suffered another sharp selloff as the London FTSE chalked up large losses on Friday. There were no major reports out of the UK on Friday and none are due today, which suggests potentially quiet trading ahead of the top-tier reports (CPI, jobs, retail sales) due later on this week.

CHF

The franc also managed to hold on to some of its recent wins even with the risk-off market environment last week. There were no reports out of Switzerland last Friday and market sentiment might be the only strong driver of price action today with no other reports due as well.

JPY

The yen took advantage of the run in risk aversion on Friday, as it advanced against higher-yielding currencies and even the safe-haven US dollar. There have been no major reports out of Japan then while today has the revised industrial production and tertiary industry index due.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were in the red again when traders started pricing in the potential impact of Iran’s return to the oil export market once the Western sanctions are lifted. Concerns about China’s growth figures due this week also gripped the market, leading traders to steer clear of riskier currencies and assets. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader’s Way

604

USD

The US dollar had a pretty quiet trading day since there were no major reports released and traders were off on a holiday. For today, there are still no major reports lined up, which suggests that the US currency could take its cue from market sentiment and US equities.

EUR

The euro was stuck in consolidation against most of its peers yesterday since there were no major market catalysts. German final CPI and the euro zone current account balance are up for release today, with strong readings likely to keep the shared currency supported. Also lined up is Germany’s ZEW economic sentiment index and the euro zone final CPI readings.

GBP

The pound could be in for a lot of volatility today since the UK is set to print its latest inflation reports. The headline CPI is expected to stay unchanged at 0.1% while the core CPI could also hold steady at 1.2%. Stronger than expected readings could give the pound a bit of a boost while weak data could lead traders to push back rate hike expectations further.

CHF

The franc was also in consolidation mode yesterday since traders are waiting for more clues from the market. Swiss PPI is up for release today and a 0.2% uptick in producer prices is expected, weaker compared to the previous 0.4% gain.

JPY

The yen was unable to make much headway against its higher-yielding peers when the risk-off flows weren’t so strong yesterday. There have been no major reports out of Japan then and none are due today, keeping risk sentiment in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls held steady ahead of China’s GDP release today then resumed their drop upon seeing slightly weaker than expected data. The actual reading came in at 6.8% versus the projected 6.9% rise while industrial production fell from 6.2% to 5.9%. Fixed asset investment and retail sales also weakened. In the next Asian trading session, New Zealand will have its GDT auction and any changes in dairy prices could lead to strong Kiwi moves. NZ quarterly CPI is also due and a 0.2% decline in price levels is expected.

By Kate Curtis from Trader’s Way