Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
62

USD

The dollar was off to a good start for the week, as risk aversion remained in the markets for most of the Asian session. However, the U.S. ISM manufacturing PMI failed to impress market participants as it clocked in at 50.9. This was only slightly higher than expectations of a 50.6 reading, an improvement over the 49.0 figure last May. There are no major reports from the U.S. today, only the medium-tier factory orders data and speeches by a couple of Fed officials. Dudley has downplayed the Fed’s stimulus taper plan last week and could dish out similar remarks again today, which could lead to dollar selling.

EUR

The euro was able to gain strength against the dollar in yesterday’s trading, as it climbed from the 1.3000 area until the 1.3050 level. Data from the euro zone came in stronger than expected, as Italian manufacturing PMI came in better than expected and so did the euro zone jobless rate. For today, only the Spanish unemployment change is expected from the euro zone, and it could show another round of improvements in the labor sector. If that’s the case, the euro could continue to draw support.

GBP

The pound was off to a good start but returned most of its gains, even though the U.K. manufacturing PMI came in better than expected. The figure improved from 51.5 to 52.5 instead of dipping to the expected 51.3 reading. Net lending to individuals fell short at 1.0B instead of climbing from 1.3B to 1.4B. For today, the construction sector will release its PMI figure and possibly print an improvement from 50.8 to 51.3. Aside from that, MPC member Tucker is set to give a speech and the 10-year bond auction will be conducted in the UK.

CHF

The franc weakened in yesterday’s trading since the SVME PMI showed slower manufacturing activity in Switzerland. The reading slipped from 52.2 to 51.9 instead of improving to 52.5. There are no major reports due from Switzerland today which suggests that USD/CHF movement could be driven by US data.

JPY

USD/JPY edged higher in yesterday’s trading, moving closer to the 100.00 handle. Average cash earnings in Japan remained flat and missed the expectations of a 0.6% uptick. There are no reports due from Japan today, which suggests that yen pairs could be dependent on risk sentiment and currency-specific events.

Commodity Currencies (AUD, CAD, NZD)

Comdolls retreated in yesterday’s trading as risk aversion remained in the markets. The Australian dollar tested the .9250 level, but dropped right back below .9200 when the RBA decided to keep rates unchanged and mentioned that the Aussie is still relatively overvalued. There are no other releases due from the commodity-dependent economies today.

By Kate Curtis from Trader’s Way

63

USD

The US dollar made a stellar recovery against its major counterparts in yesterday’s trading, pushing EUR/USD below the 1.3000 handle and USD/JPY above the 100.00 mark. There were no major reports released from the US yesterday, as risk aversion was the main reason for the dollar’s climb. The US is set to print its ISM non-manufacturing PMI today and possibly show an improvement from 53.7 to 54.3. However, a weaker than expected figure could force the dollar to return some of its recent gains. Bear in mind that US traders will be off on a Fourth of July holiday tomorrow so we could witness some profit-taking for today.

EUR

The euro was sold off heavily yesterday when news a potential delay in Greece’s next batch of bailout funds could be delayed. Apparently, the country was unable to fulfill some of the requirements to secure the next tranche of aid. As for data, there have been no major reports released from the euro zone and only the medium-tier retail sales report is due today.

GBP

The pound was relatively one of the more resilient currencies in yesterday’s trading, although it still lost some ground to the US dollar. UK construction PMI improved from 50.8 to 51.0, slightly lower than the estimated 51.3 reading. Today, the UK will release its services PMI data and possibly show a dip from 54.9 to 54.6, reflecting weaker expansion in the industry.

CHF

The franc lost ground to the dollar, as USD/CHF climbed past the .9500 handle. There were no reports released from Switzerland for the past 24 hours and none are due today, suggesting that the franc could continue to be sensitive to US data or risk sentiment.

JPY

The yen saw a round of weakness yesterday, particularly to the US dollar. The Nikkei chalked up a 13% rebound recently, contributing to the yen’s selloff. As for reports, Japanese average cash earnings and monetary base both missed expectations. There are no reports due from Japan for the rest of the trading day.

Commodity Currencies (AUD, NZD, CAD)

Among the comdolls, the Aussie suffered the biggest losses in yesterday’s trading as AUD/USD slipped back below the .9200 handle. Earlier today, Australia printed weak retail sales of 0.1% instead of the expected 0.4% increase while the previous period’s figure was revised down to -0.1%. CAD and NZD simply consolidated around their current levels, but breakouts could be in sight for today as traders may book profits ahead of the Fourth of July holiday.

By Kate Curtis from Trader’s Way

64

USD

The US dollar lost to most of its major counterparts in yesterday’s trading, as some traders booked profits ahead of the Fourth of July holiday in the United States. EUR/USD rebounded back to the 1.3000 major psychological level while USD/JPY slipped back below the 100.00 mark. US ISM non-manufacturing PMI came in weaker than expected, showing only a 52.2 reading instead of the estimated improvement from 53.7 to 54.3. There are no reports due from the US today.

EUR

EUR/USD suffered a heavy selloff at the start of the trading day as brewing political trouble in Portugal weighed on the country’s bailout prospects and caused a spike in bond yields. However, EUR/USD managed to pull up to the 1.3000 handle towards the end of the day as traders closed their positions around the fresh lows. Euro zone data was mixed as retail sales showed a better than expected 1.0% increase while Italian PMI fell short of expectations. The ECB rate decision is on tap for today and, even though no monetary policy changes are expected, Draghi could emphasize their readiness to add stimulus if necessary.

GBP

The pound managed to end the day higher than the dollar and the euro, as the UK printed better than expected services PMI. The reading jumped from 54.9 to 56.9 instead of dipping to 54.6. The BOE rate decision is scheduled today and it will be Mark Carney’s first statement as BOE Governor. Market participants are interested in how the new Governor will approach monetary policy so this event could trigger a large reaction among pound pairs.

CHF

The franc managed to recoup some of its recent losses to the dollar, as USD/CHF slipped back below the .9500 handle. There were no reports released from Switzerland then, leaving USD/CHF sensitive to US data. There are no reports due from Switzerland again today and none are due from the US.

JPY

The yen regained ground against its major counterparts, as the Labor Ministry reported that there was no change in Japan’s average cash earnings. On top of that, the BOJ noted that the Japanese economy is starting to pick up pace. There are no other reports due from Japan today.

Commodity Currencies (AUD, CAD, NZD)

The comdolls had a weak start, as AUD sold off and fell below the .9100 handle. Australia printed weaker than expected building permits and retail sales, although its trade balance did come in strong. Canada’s trade balance also came in better than expected, allowing USD/CAD to hold on to its recent levels. There were no reports from New Zealand, leaving NZD/USD in consolidation.

By Kate Curtis from Trader’s Way

65

USD

The US dollar was one of the strongest performing currencies in yesterday’s trading as it posted huge gains against the pound and euro. US traders were off on a holiday celebrating the Fourth of July, which explains why there were no economic reports released from the US yesterday. For today, the US NFP report is due and a smaller increase in hiring is projected. Based on the results of the ADP report released earlier this week though, an upside surprise could be in the cards, which could continue to lift the dollar.

EUR

The euro suffered a heavy selloff in yesterday’s London and US sessions when ECB head Mario Draghi announced that interest rates would be kept low for an extended period of time. This triggered a sharp reaction from euro pairs, as the central bank opted to practice forward guidance in influencing longer-term interest rates. Only the German factory orders report is due today and it is expected to show a rebound of 1.3% from the previous 2.3% decline.

GBP

The pound was also under heavy selling pressure in the previous trading sessions when the BOE practiced forward guidance in saying that there will be no rate hike until mid-2015. This was a surprise, considering it was Mark Carney’s first statement as BOE head. There are no reports due from the UK today, which suggests that the pound could continue to sell off if there are no changes in market sentiment.

CHF

The franc was outpaced by the dollar but it managed to pack some gains against the euro. USD/CHF spiked to the .9580 area despite the lack of data from the US and Switzerland. Swiss foreign currency reserves data and CPI are due today. Higher foreign currency reserves could mean that the SNB is finding it more expensive to maintain its currency peg. Price levels are foreseen to drop by 0.1%, which could worsen the franc’s selloff.

JPY

The yen managed to gain against the pound and euro but it lost ground to the dollar, as USD/JPY spiked to the 100.40 area from 99.50. There were no reports released from Japan, but BOJ Governor Kuroda had a speech in which he said that their current easing efforts are starting to work out.

Commodity Currencies (AUD, CAD, NZD)

Comdolls struggled to hold on to their current levels, with AUD/USD holding on to the .9100 handle and USD/CAD staying around the 1.0500 mark despite the jump in volatility. NZD/USD is still stuck in its recent range between .7700 and .7830. There are no major reports due from Australia and New Zealand but Canada is set to print its jobs data and Ivey PMI. Joblessness could drop by 4.2K in June while the Ivey PMI is projected to dip from 63.1 to 59.6.

By Kate Curtis from Trader’s Way

66

USD

Better than expected jobs data boosted the dollar against its counterparts on Friday, as the NFP figure came in at 195K. This was higher than the estimated 163K reading while the previous month’s figure saw an upward revision to 195K. However, the jobless rate held steady at 7.6% instead of improving to 7.5% as more and more Americans returned to the labor force. For today, there are no major reports due from the US.

EUR

The euro sold off heavily on Friday, still weighed down by the dovish ECB rhetoric during the previous day. As Draghi said, euro zone interest rates will remain low for an extended period. It didn’t help that Portugal was still undergoing political trouble while Greece’s next set of bailout funds is at risk. The Troika will be evaluating whether Portugal met its requirements to secure the next batch of bailout funds today, and this could have a huge impact on the euro. Eurogroup meetings are also taking place today and Germany will be releasing its industrial production report.

GBP

The pound was one of the weakest currencies last week, as BOE Governor Carney clarified that there will be no rate cut in the next couple of years. There are no reports due from the UK today, as the downbeat monetary policy statement could continue to drag the pound lower.

CHF

The Swiss franc reached the .9650 minor psychological resistance against the dollar last Friday, as strong US NFP data boosted the Greenback. Switzerland will release its unemployment rate today and possibly show no change from the current 3.2% rate. An increase in joblessness though could push USD/CHF even higher.

JPY

The yen weakened against the dollar on Friday but managed to gain against the euro and pound. There were no major reports released from Japan then, but the country reported a 0.62 trillion JPY current account balance for May as expected. The Economy Watchers Sentiment index is due from Japan today, and a higher than expected figure could help keep the yen’s losses in check.

Commodity Currencies (AUD, CAD, NZD)

There were no major releases from Australia and New Zealand on Friday, but Canada was able to release its jobs data and Ivey PMI. Canada lost only 0.4K jobs in June, better than the estimated 4.2K decline while the jobless rate held steady at 7.1%. As for the Ivey PMI, the figure posted a sharp decline from 63.1 to 55.3 instead of just dipping to 59.6. Only the Canadian building permits is due from the comdoll economies for today.

By Kate Curtis from Trader’s Way

67

USD

The US dollar lost ground to most of its major counterparts in yesterday’s trading, as traders took profits off their positions from last week. EUR/USD rebounded off the 1.2800 area while USD/JPY dipped below the 101.00 mark. There were no reports released from the US yesterday and there are no big ones for today, as traders could position themselves early ahead of the FOMC meeting minutes release later on in the week.

EUR

The euro made a slight recovery against the US dollar while EUR/JPY moved mostly sideways below 130.00. The resolution of the conflict in Portugal, as the Prime Minister declared a cabinet reshuffle, and the approval of the bailout funds for Greece was enough to boost the euro even though data was weak. German industrial production showed a 1.0% decline instead of the estimated 0.5% dip while its trade balance showed a 14.1 billion EUR surplus, which is lower than the estimated 17.4 billion EUR surplus. There are no reports due from the euro zone today so keep tabs on updates regarding the ongoing ECOFIN meetings.

GBP

The pound rebounded from its previous lows against the dollar on Monday, as GBP/USD climbed back above 1.4900. There were no releases from the UK at the start of the week, but the country will be printing its manufacturing production and trade balance figures today. Manufacturing production could rebound by 0.5% after dipping by 0.2% in the previous month while the trade deficit is expected to widen from 8.2 billion GBP to 8.4 billion GBP.

CHF

USD/CHF gapped up over the weekend but the gap was quickly filled as the pair retreated on Monday. Swiss joblessness held steady at 3.2% and its retail sales report is due today. On an annualized basis, Swiss retail sales could see a 3.7% increase, better than the previous 3.3% figure. A better than expected reading could support the franc against the dollar and euro today.

JPY

The yen may have gained against the dollar on Monday but it lost to its other major counterparts as Japan still showed some signs of weakness. Current account surplus fell from 0.85 trillion JPY to 0.62 trillion JPY as expected while bank lending accelerated from 1.8% to 1.9%. The Economy Watchers Sentiment index slipped from 55.7 to 53.0 instead of just dipping to 55.6. No reports are due from Japan today.

Commodity Currencies (AUD, CAD, NZD)

The comdoll bunch managed to recover against the Greenback on Monday, buoyed by a rebound in commodity prices. The ongoing conflict in Egypt is boosting oil prices, as the possibility of a spillover in other Middle East countries could limit the production and supply of oil. Meanwhile, Canada printed stronger than expected building permits while New Zealand showed an improvement in business confidence. Australian NAB business confidence also saw a return to neutral territory from a -1 reading previously.

By Kate Curtis from Trader’s Way

68

USD

Once again, the US dollar proved its strength against the euro and the pound. EUR/USD dipped to fresh lows around the 1.2775 area while GBP/USD fell below the 1.4900 handle. There were no major reports released from the US yesterday, as traders gear up for the release of the FOMC meeting minutes at 7:00 pm GMT today. Recall that the Fed announced its plans to reduce bond purchases at the end of the year, causing a huge dollar rally during their rate statement. The minutes of their policy meeting should shed light on the data that led them to this taper plan and if a lot of policymakers support the idea. If the minutes don’t contain much surprises, it could turn out to be a non-event for the dollar pairs.

EUR

The euro dropped to new lows against the dollar when euro zone debt concerns started popping up again. An ECB member said that the euro zone should be ready for more capital shortfalls, as the region could be in for more refinancing operations and a much longer period of low interest rates. Meanwhile, Italy suffered a downgrade from S&P, as the credit rating agency cited growth concerns. There are no major reports due from the euro zone today, which suggests that EUR/USD’s movement could be focused on the FOMC minutes.

GBP

The pound tumbled against the Greenback once more when British data disappointed. Manufacturing production fell by 0.8% in May, following the 0.2% decline seen last April. This was worse than the estimated 0.3% increase. Industrial production remained flat instead of climbing by 0.3% while the previous month’s figure was revised down to show a 0.1% decline. There are no reports due from the UK today, as traders could pay close attention to the FOMC minutes.

CHF

The franc lost ground to the dollar again as Swiss retail sales disappointed. Analysts predicted an increase from 3.3% to 3.7% but the actual figure showed a measly 1.8% annual increase for May. No reports are due from Switzerland today.

JPY

The yen had a mixed performance as it gained against the euro and pound but held steady against the dollar. Data from Japan has been mixed, as machine tool orders showed a 12.4% decline while tertiary industry activity showed a stronger than expected 1.2% increase. Consumer confidence came in worse though, as the reading fell from 45.7 to 44.3 instead of improving to 47.2.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies managed to score gains against the dollar, as AUD/USD climbed above the .9200 handle and NZD/USD broke out of its recent range. USD/CAD is holding steady above the 1.0500 handle, as the Loonie is supported by rising oil prices. Australian Westpac consumer confidence posted a 0.1% decline. New Zealand is set to print its Business NZ manufacturing index in the upcoming Asian session. No other reports are due from Canada and Australia.

By Kate Curtis from Trader’s Way

69

USD

The US dollar was sold off heavily in yesterday’s US session, as the minutes of the FOMC meeting showed that there was a lot of dissent surrounding the proposed stimulus taper schedule. Not all policymakers agree that the central bank should start reducing the level of its bond purchases by the end of the year, as improvements in the labor market are not that significant enough. USD/JPY fell back below the 100.00 level while EUR/USD climbed above the 1.3000 handle. The initial jobless claims release is the only event from the US today.

EUR

The euro was able to stage a successful rebound against the dollar in yesterday’s trading, as the FOMC minutes turned out to be a bit of a surprise. As for data, medium-tier reports printed weaker than expected results, with the French industrial production report showing a 0.4% decline. Manufacturing production also posted a decline while their current account deficit widened. More medium-tier reports are due from the euro zone today but this might not be enough to derail EUR/USD from its recent rallies.

GBP

The pound recovered against the US dollar in yesterday’s trading, as the FOMC minutes disappointed the dollar bulls. There were no reports released from the UK and none are due for today. The only event on the UK schedule is the speech by MPC member Miles, and this should shed some light on whether he supports Carney’s pledge of keeping monetary policy loose for the foreseeable future.

CHF

The franc rallied against the Greenback in yesterday’s trading, pushing USD/CHF down by more than 300 pips. There were no reports printed from Switzerland then and none are due today, leaving USD/CHF vulnerable to dollar behavior.

JPY

The yen managed to pocket huge gains against the US dollar yesterday, eventually pushing USD/JPY down the 100.00 level and back to the 98.50 area of interest. Earlier today, the BOJ had its monetary policy announcement and Governor Kuroda made no changes to its current level of easing.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies outpaced the Greenback yesterday, with USD/CAD breaking below the 1.0500 barrier and AUD/USD climbing back above .9200. New Zealand’s manufacturing index showed a drop in industry activity but this wasn’t enough to derail the Kiwi’s rally against the dollar. Australia’s jobs report came in mixed, with a better than expected employment change reading of 10.3K but a worse than expected jobless rate of 5.7%. No other reports are due from the comdoll economies in the upcoming trading sessions.

By Kate Curtis from Trader’s Way

70

USD

The US dollar had a mixed performance in yesterday’s trading as it lost ground to the euro and pound, but managed to score gains against the Australian dollar and New Zealand dollar. There were no major reports released from the US yesterday, only the initial jobless claims which showed a higher than expected increase in first-time claimants. However, analysts noted that this might just be an effect of the Fourth of July holiday. For today, the PPI and UoM consumer sentiment figures are due, and upbeat figures could renew demand for the US dollar.

EUR

There were no red flags on the euro zone’s calendar in yesterday’s trading, allowing the euro to regain ground against the US dollar. There are no major reports again today, except perhaps for the euro zone industrial production release. This is expected to show a 0.2% downtick after increasing by 0.4% last month.

GBP

The pound was one of the better performing currencies in yesterday’s trading as it managed to make a strong recovery against the US dollar. There were no reports released from the UK, but the country is set to print its CB leading index today. A 0.2% increase was seen last time and another increase could help lift the pound higher against its counterparts.

CHF

The Swiss franc continued to gain against the Greenback in yesterday’s trading, despite the lack of data from Switzerland. The Swiss economic schedule is empty again for today, which suggests that the franc might be able to benefit from dollar weakness if it persists until the end of the week.

JPY

The yen was mostly stuck in consolidation for yesterday as there were no major reports released from Japan. The BOJ statement turned out to be a non-event as Kuroda didn’t announce anything special for their monetary policy. Only the revised industrial production report and BOJ monthly report are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi suffered huge losses against the dollar in yesterday’s trading as weaknesses in China continued to dampen sentiment for commodity-dependent nations. Australia’s jobs report printed better than expected results of 10.3K instead of the mere 0.3K increase expected. However, its home loans report missed the mark and showed a 1.8% rise instead of the estimated 2.3% growth. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader’s Way

71

USD

The US dollar lost its legs in yesterday’s trading as it was weighed down by weaker than expected US retail sales. The headline figure posted a mere 0.4% uptick while the core version of the report showed a flat reading. This was lower than the estimated 0.7% increase in headline retail sales and the projected 0.5% growth in core retail sales. Apparently, US consumers cut back on purchases of gadgets and food while upping spending on automobiles and home furnishings. For today, the CPI figures are due and consumer price levels are expected to rise by 0.3% while core price levels could show another 0.2% increase.

EUR

EUR/USD was mostly stuck in consolidation for yesterday’s trading as there were no major reports released from the euro zone. German and euro zone ZEW figures are due today and small improvements are expected. German ZEW economic sentiment could climb from 38.5 to 39.8 while the region’s figure is slated to rise from 30.6 to 31.8, reflecting a rise in optimism.

GBP

The pound was off to a weak start in the Asian session but soon found support at the 1.5050 minor psychological level before rebounding back to the 1.5100 area. There were no economic reports released from the UK, as the country is set to print its CPI figures today. Annual inflation is set to climb from 2.7% to 3.0%, way above the central bank’s 2% inflation target. This should mean that the BOE would have less scope for monetary policy easing, which might be positive for the pound in the near term.

CHF

The Swiss PPI report fell below expectations as it showed a mere 0.1% uptick in producer price levels. However, the franc still managed to hold on to its recent gains against the dollar, as USD/CHF stayed around the .9500 handle. There are no major reports from Switzerland today, which suggests that USD/CHF action could be mostly dependent on US data.

JPY

Even though Japanese traders were on a holiday yesterday, the yen managed to score gains against the US dollar mostly during the New York session. There are no reports due from Japan again today, which suggests that the movement of yen pairs could be dependent on currency-specific data.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar was bogged down by weaker than expected Chinese GDP in yesterday’s Asian session, as the country grew by only 7.5% for the second quarter. Meanwhile, quarterly inflation in New Zealand also disappointed, as the figure showed a mere 0.2% uptick instead of the estimated 0.3% rise. Canadian manufacturing sales are on tap for today and a 0.7% rebound is eyed to follow the 2.4% drop recorded previously.

By Kate Curtis from Trader’s Way

72

USD

The US dollar had a mixed performance yesterday, as it lost ground to some counterparts but managed to advance against others. US CPI was mostly in line with expectations, as the core figure printed the estimated 0.2% uptick while the headline CPI showed a higher than expected 0.5% increase. Industrial production was better than expected at 0.3% while capacity utilization came in line with consensus at 77.8%. US building permits and housing starts are due today but the bigger market mover could be Fed head Bernanke’s speech, as the Chairman is expected to set the record straight regarding the stimulus taper plan.

EUR

EUR/USD broke to the upside in yesterday’s trading, as the pair landed back above the 1.3100 handle. Data from the euro zone was mixed, as the German ZEW disappointed while the euro zone ZEW was better than expected. The German ZEW figure dipped from 38.5 to 36.3 while the euro zone ZEW reading climbed from 30.6 to 32.8. Only the German bond auction is scheduled for the euro zone today.

GBP

The pound had a choppy trading day, as the UK CPI release did very little to provide direction for pound pairs. The actual figure fell a little short of consensus at 2.9%, higher than the previous 2.7% reading. For today, the claimant count change is up for release and it is slated to show a 7.5K decline in unemployment claimants for June. Also due today is the MPC votes for asset purchases and interest rates, and it would be interesting to see how Carney voted in this meeting.

CHF

No reports released from Switzerland yesterday yet the franc still managed to post some gains against the US dollar. For today, the Swiss ZEW economic expectations report is due and it is expected to show an improvement from the previous 2.2 reading.

JPY

The yen gained against the dollar but lost ground to the pound in yesterday’s trading. EUR/JPY managed to stay stuck in consolidation though. Only the monetary policy meeting minutes were released from Japan and it revealed that BOJ policymakers are starting to see some notable improvements in the Japanese economy. There are no reports due from Japan for the next 24 hours, which suggests that the movement of yen pairs could depend on currency-specific events.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar got a strong boost from the RBA minutes, which showed that the central bank is happy that the Aussie depreciation is contributing positively to economic activity. Only medium-tier business sentiment data is due from Australia in the coming trading hours while Canada is set for the BOC interest rate decision. This is Poloz’s first rate statement so it should be indicative of how monetary policy will fare in the future.

By Kate Curtis from Trader’s Way

73

USD

The US dollar experienced a lot of volatility during the US session, as Ben Bernanke’s speech had a confusing impact on dollar pairs. At first, the transcript of his speech was interpreted by some market watchers to say that the Fed’s stimulus taper plan by the end of the year is still uncertain. However, when the press conference took place and Bernanke was able to clarify some remarks, the markets realized that the central bank is still on track to reduce bond purchases by Q4, as long as inflation and employment continue to improve. As for data, building permits and housing starts both disappointed. For today, initial jobless claims and the Philly Fed index are due.

EUR

The euro consolidated against the dollar for most of the day then encountered additional volatility during the New York session. In the euro zone, the Bank of Italy reduced its growth forecasts for the year, adding to selling pressure on the euro. Only the current account balance release and the Spanish bond auction are scheduled for the euro zone today.

GBP

The pound managed to score huge gains in yesterday’s trading sessions as the MPC vote turned out better than expected. Apparently, MPC members voted unanimously to keep interest rates and asset purchases unchanged, different from the expected 2-0-7 vote or the previous 3-0-6 vote. It appears that the improvements in the UK economy have convinced some dovish members to decide that the current level of monetary policy is appropriate. Claimant count change figures also came in better than expected and showed a larger decrease in claimants for June. UK retail sales are up for release today and a 0.2% uptick is expected.

CHF

The franc was unable to hold on to most of its gains against the dollar, as USD/CHF landed back above the .9400 handle. Swiss ZEW economic expectations improved from 2.2 to 4.8 but Bernanke’s speech had a bigger impact on the pair’s movement. For today, Swiss trade balance is up for release and it isn’t likely to have a strong effect on the franc’s direction.

JPY

The yen lost ground to its counterparts when the BOJ minutes revealed that policymakers are in disagreement when it comes to retaining long-term bond purchases as part of their stimulus efforts. For some, this is necessary in controlling volatility in Japanese markets but others cautioned that it could lead to a spike in borrowing costs later on. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls lost ground to the dollar in yesterday’s trading, as Bernanke confirmed that the Fed is still on track to reduce bond purchases. The Australian dollar got a heavier blow earlier today when the NAB quarterly business confidence figure sank from 2 to -1. As for Canada, the BOC kept monetary policy unchanged although Poloz did alter some of the lines in the previous statements. In addition, he adopted forward guidance by giving the markets some clues as to when they could start normalizing interest rates. There are no other reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader’s Way

74

Forex Major Currencies Outlook (July 19, 2013)

USD

The dollar regained ground when the US printed better than expected Philly Fed manufacturing data, with the index climbing from 12.5 to 19.8 instead of dipping to the consensus of 8.5. This goes to show that the Fed is still on track to taper in September and the economy could draw support from the manufacturing sector. Initial jobless claims were also better than expected at 334K, lower than the estimated 344K reading. No reports are due from the US today but be wary of profit-taking prior to the weekend’s G20 meetings.

EUR

Euro zone’s current account balance was weaker than expected, with the surplus shrinking from 23.8B to 19.6B. The ECB decided to ease collateral rules for acceptable asset-backed securities in hopes of spurring lending further. Medium-tier reports such as German PPI and Spanish housing price index are on tap from the euro zone today, both of which are unlikely to spur one-directional moves from euro pairs.

GBP

UK retail sales came in line with consensus as the report showed a 0.2% uptick. This was weaker than the previous 2.1% increase, but the positive figure was still able to lift the pound. Only the public sector borrowing report is due from the UK today, and given the state of their finances, it would be helpful to see a decline in the public deficit. Otherwise, the pound might give up some of its gains.

CHF

Swiss trade balance was better than expected at a surplus of 2.73B CHF, higher than the estimated 2.41B CHF. The previous month’s figure was revised to 2.12B CHF though. No reports are due from Switzerland today so we might see sideways movement for franc pairs.

JPY

The yen lost more ground to its counterparts in yesterday’s trading as Abe’s political party showed a strong lead in early polls. This means that Japan could be in for more aggressive structural reforms, which would include policies to keep the yen weak. All industries activity data is on tap for today and weak figures could lead to further yen weakness.

Commodity Currencies (AUD, NZD, CAD)

The commodity currencies struggled to hold on to their recent gains against the dollar, with the Canadian dollar showing some success. Canadian wholesale sales were much better than expected at 2.3%, higher than the estimated 0.4%, while the previous month figure enjoyed an upward revision. Meanwhile, Australian CB leading index was flat and the NAB quarterly business confidence report dipped from 2 to -1. Credit card spending in New Zealand rose by 5.4%, which helped lift the Kiwi. Canadian CPI data are up for release in today’s US session.

By Kate Curtis from Trader’s Way

75

USD

The US dollar was off to a weak start for the week, as the existing home sales report turned out to be a disappointment. The actual report posted a 5.08 million figure instead of the estimated 5.27 million reading. This was also lower than the previous 5.18 million figure. For today, only the Richmond manufacturing index is due from the US and while this doesn’t normally induce a strong reaction from the dollar, it could leave a lasting impact today. After all, it is the only US release on deck. The reading is slated to dip from 8 to 7 but a strong reading could be positive for the dollar.

EUR

The euro managed to score more gains against the US dollar in yesterday’s trading but it gave way to yen strength. In Portugal, the coalition government was still unable to reach an agreement yet Silva announced that early elections are no longer necessary. There are no major reports due from the euro zone today, as the only release is the consumer confidence report. The figure is expected to post a small improvement from -19 to -18, which could still be positive for the euro.

GBP

The pound was able to end the day higher against the US dollar and euro while struggling to hold on to its recent gains against the yen. There were no reports released from the UK yesterday but the upbeat sentiment from the previous week’s release of monetary policy votes. BBA mortgage approvals are up for release today and a 38.5K figure is expected, which is higher than the previous 36.1K reading. A strong figure could allow the pound to extend its rallies.

CHF

There were no reports released from Switzerland yesterday yet the franc managed to score gains against the dollar, which was sold off because of weak existing home sales. There are no reports again from the Switzerland today, which could mean quiet trading for USD/CHF as there are no major reports from the US.

JPY

The yen continued to benefit from the recently concluded elections in Japan, which showed that Abe and his party was able to secure a landslide victory. There are no reports due from Japan today, which suggests that the yen could be in for quiet trading or could be sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were able to benefit from the rise in commodity prices on Monday, as AUD/USD climbed past the .9200 handle while USD/CAD broke below the short-term support. Canada is set to print retail sales data today and small improvements are expected while New Zealand will release its trade balance in the upcoming Asian session. A trade deficit of 102 million NZD is expected to follow the previous 71 million NZD surplus, which might be negative for the Kiwi.

By Kate Curtis from Trader’s Way

76

Forex Major Currencies Outlook (July 24, 2013)

USD

Dollar weakness was still evident in yesterday’s trading, as EUR/USD broke higher while the commodity currencies extended their wins against the Greenback. Only the Richmond manufacturing index was released from the US and it showed a disappointing -11 reading instead of improving from 8 to 7. This revealed that there are still some inherent weaknesses in the US economy, which reminded traders that the Fed taper isn’t set in stone just yet. For today, new home sales and crude oil inventories are up for release. Remember that existing home sales came in weak earlier this week, which increases the chance for a downside surprise in new home sales.

EUR

The euro ended the day higher against the dollar again, despite the lack of data from the euro zone. Euro zone PMIs from Germany and France are up for release today and markets are expecting tiny improvements in the manufacturing and services sectors of both economies. Although most of the figures are projected to stay below 50.0 and indicate contraction, strong data could help lift the euro against its counterparts.

GBP

The pound managed to pocket some gains against the dollar yesterday, even though the BBA mortgage approvals report came in weak. The figure logged in a 37.3K increase, higher than the previous 36.3K reading but lower than the estimate at 38.5K. Still, an increase is an increase, and this was received positively by pound traders as it indicates that the government’s Funding for Lending Scheme is bearing fruit. CBI industrial orders expectations are due today and the figure is estimated to improve from -18 to -12, indicating that the decline was slower during the period.

CHF

No reports were released from Switzerland yet the franc continued its winning ways. Switzerland’s schedule is still empty for today, which suggests that USD/CHF and EUR/CHF could take their cues from US data and euro zone reports respectively.

JPY

The yen had a mixed performance as it remained sensitive to currency-specific data of its counterparts. The good news from Japan though is that the BOJ upgraded their growth forecasts for the third month in the row, revealing that the central bank believes their stimulus efforts are working out. The trade balance came in slightly below consensus as it printed a -0.6T JPY reading instead of the estimate at -0.58T JPY, but was still better than the previous -0.78T JPY figure.

Commodity Currencies (AUD, NZD, CAD)

Not even the drop in commodity prices was able to keep the comdolls from ending with wins, as AUD/USD reached the .9300 area while USD/CAD dipped to 1.0300. New Zealand’s trade balance came in much better than expected at 414M instead of the estimate at 5M, allowing NZD/USD to come close to .8000. Canadian retail sales also posted a strong upside surprise while Australian quarterly CPI came in as expected. Chinese flash manufacturing PMI from HSBC was weaker than estimated though, as it slipped from 48.2 to 47.7 instead of improving to 48.6.

By Kate Curtis from Trader’s Way

77

USD

The US dollar regained its strength in yesterday’s trading as a combination of risk aversion and strong US new home sales boosted the safe-haven currency. The actual new home sales figure showed a 497K reading, higher than the estimated 482K figure. However, the previous month’s report was revised down to show a 459K figure. US durable goods orders data are scheduled for release today and the headline figure is slated to print a 1.1% increase while the core version of the report could show a 0.5% uptick. Stronger than expected data could lift the dollar against its counterparts once more.

EUR

Euro zone PMI figures all came in stronger than expected for July, with Germany’s reports showing an expansion in its manufacturing and services industries. This was enough to push the region’s manufacturing PMI above the 50.0 mark as well, showing that the industry grew for the month. Spanish jobs data and German Ifo business climate index are up for release today. Germany’s business climate reading is expected to improve from 105.9 to 106.3 while Spain’s jobless rate could hold steady at 27.2%.

GBP

The pound was unable to hold on to its recent gains against the dollar as GBP/USD failed to break past the 1.5400 handle. UK CBI industrial orders expectations came in line with consensus, as it improved from -18 to -12. The UK preliminary GDP figure is up for release today and a 0.6% growth figure is expected. Stronger than expected data could push GBP/USD past 1.5400 while weak data could trigger a sharper selloff.

CHF

There were no reports released from Switzerland yesterday, leaving the franc victim to dollar strength. Switzerland’s schedule is empty again today, which suggests that USD/CHF could move according to US data once more.

JPY

Japanese CSPI came in weaker than expected at 0.4% instead of the estimated 0.7% increase. Inflation data is coming up in the next Asian session and these could be crucial in determining if the BOJ’s stimulus plans are still working or if additional easing is needed.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi gave way to dollar strength yesterday, as both commodity currencies were weighed down by weak Chinese PMI. HSBC reported a deeper contraction of 47.7 for July as the index was expected to improve from 48.2 to 48.6. Australian quarterly CPI came in line with consensus at 0.4%, which suggests that the RBA doesn’t need to implement additional stimulus anytime soon. As for the Loonie, CAD bulls continued to push the currency higher against most of its other counterparts thanks to strong Canadian retail sales for May.

By Kate Curtis from Trader’s Way

78

USD

The US dollar continued to cave under the higher-yielding currencies in yesterday’s trading, as mixed durable goods orders data led traders to believe that the U.S. recovery is unsustainable. The headline figure showed a 4.2% jump, mostly driven by automobile sales, while the core figure remained flat. No reports are due from the U.S. today, which opens up the possibility of profit-taking ahead of the weekend.

EUR

The euro continued to edge higher against the dollar, as EUR/USD tapped the 1.3300 area during the U.S. session. German Ifo business climate came in line with consensus at 106.2, which is a good improvement from the previous month’s figure. For today, there are no major reports from the euro zone. Only the German consumer prices report is up for release at 7:00 am GMT.

GBP

The pound had a choppy trading day, especially after the release of the UK preliminary GDP figure. The actual report showed a 0.6% uptick as expected, but this appeared to disappoint pound traders as the currency suffered a quick selloff against most of its counterparts upon the release. No reports are due from the U.K. today.

CHF

There were no reports released from Switzerland yesterday and none are due today, which suggests that the franc could continue to take advantage of the ongoing dollar weakness.

JPY

The yen enjoyed some gains against the dollar, as Japan printed another round of increases in consumer price levels. Tokyo showed a 0.3% uptick as expected while the national core CPI printed a 0.4% increase, higher than the estimated 0.3% rise. This reflects how the BOJ’s massive stimulus efforts are working and that no additional stimulus is needed for now.

Commodity Currencies (AUD, NZD, CAD)

NZD/USD enjoyed a strong rally in yesterday’s trading when the RBNZ adopted forward guidance in announcing that the low rates would last until 2014 only. This prompted speculations of a rate hike, which pushed NZD/USD to the .8100 mark. Meanwhile, the Australian dollar was able to recover most of its recent losses to the dollar as it edged back above the .9200 handle.

By Kate Curtis from Trader’s Way

79

USD

Dollar pairs were stuck in consolidation last Friday, as there were no major reports released from the United States. The University of Michigan consumer sentiment figure was revised a bit higher, but it did very little to support the US dollar. For today, the pending home sales figure is up for release and a 1.1% decline is expected. A larger than expected drop could be very negative for the dollar, although traders might be hesitant to take large dollar positions ahead of the FOMC statement and GDP release on Wednesday.

EUR

The euro consolidated against the dollar on Friday, as there were no reports released from euro zone then. The euro zone schedule is still empty again for today, which suggests more quiet trading for EUR/USD. The main event for the euro this week is the ECB rate statement scheduled during the latter half. Until then, euro traders might refrain from pushing the shared currency in a particular direction.

GBP

After the volatile behavior midweek, GBP/USD stayed inside its ranges on Friday as there were no major reports from the U.K. then. Only medium-tier reports, such as mortgage approvals, net lending to individuals, and CBI realized sales are due from the UK today. Strong data could provide support for the pound while weak reports could undermine its strength.

CHF

The franc consolidated against the dollar on Friday but USD/CHF selling pressure still appears strong. The pair is on track to test the support around the .9200 major psychological level at the moment. There are no reports up for release from Switzerland again today, which suggests that USD/CHF could stay in consolidation.

JPY

The yen continues to enjoy support from improved Japanese data. The Tokyo core CPI showed a 0.3% uptick as expected while the national core CPI printed a higher than expected 0.4% increase in price levels. Earlier today, Japan released its retail sales figure and showed a 1.6% increase, close to the consensus of 1.7%. More reports from Japan, such as the household spending and industrial production figures, are due in the upcoming Asian session.

Commodity Currencies (AUD, NZD, CAD)

Comdolls stayed in consolidation on Friday, as though waiting for more clues before resuming their recent action. Only the building consents data is due from New Zealand later today and it is expected to show another positive figure.

By Kate Curtis fromTrader’s Way

80

USD

The US dollar regained ground against most of its major counterparts at the start of the week, as pending home sales printed a smaller than expected decline of 0.4%. Analysts expected a drop of 1.1%. The only major report due from the US today is the CB consumer confidence figure, which is slated to dip from 81.4 to 81.1. The US is also set to print its S&P/CS house price index and possibly show a 12.4% reading.

EUR

EUR/USD’s climb came to a halt as the pair consolidated below the 1.3300 major psychological level. There were no reports released from the euro zone yesterday, which explains the lack of direction for the pair. For today, there are a few medium-tier reports on tap and these are the German CPI, Spanish GDP, and euro zone retail PMI. Be mindful of stronger than expected data that could push EUR/USD higher or weaker than expected results that might trigger a pullback.

GBP

The pound erased some of its previous gains to the dollar in yesterday’s trading, as GBP/USD retreated to the 1.5300 area. CBI realized sales came in better than expected as it improved from 1 to 17, outpacing the consensus at 11, while mortgage approvals missed expectations. The report printed a 58K reading instead of the estimated 60K figure. For today, only the GfK consumer confidence and BRC shop price index are up for release and these aren’t likely to cause a huge impact on pound movement.

CHF

USD/CHF held steady below the .9300 handle in yesterday’s trading since the lack of top-tier catalysts from both the US and Switerland resulted in a range-bound environment. No reports are due from Switzerland again today, which suggests that this pair could be in for more consolidation.

JPY

Japanese data came in mixed, with an improvement in the jobs sector and a downturn in spending. Household spending slipped by 0.4% instead of bouncing back by 1.2% while the jobless rate dipped from 4.1% to 3.9%, better than the estimate of a 4.0% reading. Meanwhile, industrial production also missed the consensus and showed a 3.3% decline while the previous month’s figure was revised down to show a 1.9% drop. Manufacturing PMI and average cash earnings are due from Japan today and this could dictate the yen’s movement for the rest of the day.

Commodity Currencies (AUD, CAD, NZD)

The comdolls gave up some of their recent gains, as AUD/USD fell from the .9300 area while NZD/USD slipped to .8000. USD/CAD, however, was mostly stuck in consolidation. Australian building approvals were weak, as the figure showed a massive 6.9% decline. Similarly, New Zealand printed a weaker than expected building consents report. Inflation reports, such as RMPI and IPPI, are up for release from Canada today.

By Kate Curtis from Trader’s Way

81

USD

The dollar bounced back to life in yesterday’s trading as it gained against most of its major counterparts. Data from the US hasn’t been exactly very strong, as the CB consumer confidence figure actually came in weaker than expected. Instead of dipping from 81.4 to just 81.1, the index fell to 80.3. The advanced GDP is up for release today and 1.1% growth is eyed for the second quarter of the year, lower than the previous quarter’s 1.8% reading. The FOMC statement is also scheduled during the later part of the US session, and the Fed might be able to set the record straight regarding their asset purchases.

EUR

Although euro zone figures came in mostly better than expected yesterday, the euro was no match to dollar strength as traders liquidated most of their positions ahead of the top-tier US data today. German GfK consumer climate improved from 6.8 to 7.0 while Spanish GDP came in line with consensus at -0.1%. German retail sales and jobs data are due today and this might have an impact on EUR/USD, but traders might stand pat ahead of the US events.

GBP

The pound lost ground to the dollar in yesterday’s trading, even if the GfK consumer confidence figure for the UK was stronger than estimated. The reading improved from -21 to -16, outpacing the consensus at -19. There are no major reports on tap from the UK today, leaving traders to take their cues from the major events in the US.

CHF

The lack of major reports from Switzerland left the franc powerless against the dollar in yesterday’s trading. Today, Switzerland will release its UBS consumption indicator and KOF economic barometer. Both of these reports could support the franc during the London session if they come in stronger than expected or show significant improvements.

JPY

The yen edged higher against its counterparts and managed to hold on to its current levels to the dollar. Data from Japan was mixed, as the jobs report was strong but spending and production disappointed, leaving the yen mostly directionless. The average cash earnings and housing starts data are due from Japan today, although both reports aren’t likely to cause huge waves for yen pairs.

Commodity Currencies (AUD, CAD, NZD)

The comdoll gang was weighed down by the dollar in yesterday’s trading, as some traders took profits ahead of today’s key events. Weak building approvals in Australia and New Zealand dragged AUD/USD and NZD/USD lower, but the Loonie managed to stay more resilient as inflation reports from Canada came in strong. New Zealand reported an improvement in ANZ business confidence while Australia released an upbeat private sector credit data, which is providing support for their currencies at the moment.

By Kate Curtis from Trader’s Way