Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
82

USD

The dollar had a topsy-turvy day, as the GDP report from the US came in stronger at 1.7% instead of the estimate at 1.1%. The FOMC statement, however, derailed the dollar from its rallies as it showed that policymakers were uneasy about weak inflation and rising mortgage costs. For now, they are still keeping close tabs on inflation and employment before deciding if they will indeed taper next month. ISM manufacturing PMI and jobless claims are up for release today, and traders could pay closer attention to the employment component of the ISM PMI.

EUR

The euro had a volatile day against the dollar, although euro zone data came mostly in line with expectations German CPI showed a 0.5% uptick while Spanish GDP printed a 0.1% contraction. The ECB statement is scheduled for today and more volatility is expected for EUR/USD. Although Draghi pretty much detailed their monetary plans for the foreseeable future, he could still rock the euro if he says something new or highlights the recent developments in the euro zone.

GBP

The pound is also in for a volatile day as the BOE interest rate decision is scheduled later today. BOC Governor Carney outlined his plans for the central bank and monetary policy already but he could have a few things to say on how the economy is doing, and this would be crucial in dictating pound movement.

CHF

USD/CHF price action has been very choppy lately, as the US events failed to give a clear direction for the Greenback. Data from Switzerland has been relatively okay, as the KOF economic barometer improved from 1.15 to 1.23 while the UBS consumption indicator was at 1.44, down from 1.45. Swiss banks are on a holiday today, which suggests quiet trading for franc pairs.

JPY

The yen consolidated against most of its counterparts as traders are still awaiting more clues from the market. There are no major reports released from Japan recently, which suggests yen pairs could stay stuck in consolidation for a while, unless country-specific events spark huge moves for some.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were mostly stuck in consolidation, particularly for AUD/USD and USD/CAD. There were no major releases from their economies recently, although the Chinese official government PMI figures came in better than expected. The biggest movers for this pairs today could be the US ISM manufacturing PMI and jobless claims.

By Kate Curtis from Trader’s Way

83

USD

The US dollar continued its rallying ways across the charts, pushing USD/JPY above the 99.00 mark and EUR/USD down to the 1.3200 area. Data from the US has been upbeat, with both initial jobless claims and ISM manufacturing PMI coming in better than expected. The ISM figure improved from 50.9 to 55.4, its fastest climb since June 1996. The initial jobless claims report showed a 326K reading, lower than the estimate at 346K. For today, the NFP is up for release and could cause a lot of volatility among dollar pairs. A 186K figure is expected, slightly lower than the previous 195K reading but still enough to push the jobless rate down from 7.6% to 7.5%.

EUR

The euro slid lower against the dollar but managed to score some gains against the Japanese yen. The ECB statement turned out as markets expected, with no actual changes to monetary policy but Draghi highlighted some of the improvements in the euro zone economy. Only the Spanish jobs report is up for release from the euro zone today and it is expected to show that the economy added 80K jobs for the month. A higher than expected increase in hiring could lift the euro during the London session.

GBP

The pound weakened to the dollar but strengthened against the yen, as the BOE interest rate decision contained no surprises. BOE Governor Carney kept rates unchanged, as expected. Meanwhile the UK manufacturing PMI printed a strong result of 54.6, higher than the estimate at 52.8. Construction PMI is due from the UK today and it’s expected to rise from 51.0 to 51.6.

CHF

There were no reports from Switzerland as the country was on a holiday. With that, the franc fell victim to dollar strength, pushing USD/CHF out of its downtrend on the shorter-term time frame. For today, the SVME PMI is up for release and it’s expected to improve from 51.9 to 53.1, which could lift the franc against its counterparts.

JPY

The yen was no match to the strength of other major currencies as there were no major reports released from Japan yesterday. The calendar is still empty for today, which suggests that we could see more or less the same behavior from the yen, unless there’s a huge shift in market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to stay resilient against the dollar in yesterday’s trading as upbeat Chinese official manufacturing PMI data helped lift the Australian dollar. For today, the NFP report could be one of the biggest movers for the comdoll gang. Australian PPI came in weaker than expected at 0.1% instead of the estimate at 0.5%, which suggests the RBA does have room to ease if needed.

By Kate Curtis from Trader’s Way

84

USD

The US dollar lost ground to some of its counterparts in yesterday’s trading as risk sentiment seemed to improve and favor the higher-yielding currencies. As for economic data, the US ISM non-manufacturing PMI report came in stronger than expected as the reading climbed from 52.2 to 56.0, outpacing the consensus at 53.2. Only the trade balance is up for release today and the deficit is projected to narrow from 45 billion USD to 43.1 billion USD.

EUR

The euro was able to hold on to its recent gains against the dollar, as EUR/USD continued to trade close to the 1.3300 major psychological resistance. Data from the euro zone was mixed as the Spanish and Italian PMIs came close to expectations while the region-wide Sentix investor confidence report fell short. The actual reading improved from -12.6 to -4.9, lower than the estimate at 9.8. No major reports are due from the euro zone today, as the only releases are the Italian industrial production and German factory orders.

GBP

The British pound had a stellar performance yesterday as Cable inched close to the 1.5400 major psychological level. UK services PMI came in much higher than expected as it jumped from 56.9 to 60.2, higher than the estimate at 57.4. The manufacturing production is up for release today and it is expected to show a 0.9% rebound from the 0.8% decline seen last time.

CHF

There are no major releases from Switzerland recently, leaving USD/CHF sensitive to US data. The pair was able to rally past the .9300 handle in yesterday’s trading but ended up erasing most of its gains anyway. Consolidation could be the name of the game for USD/CHF today as the medium-tier US trade balance release isn’t expected to cause a lasting reaction.

JPY

The yen continued to edge higher against most of its counterparts, although longer-term time frames still point at consolidation. There were no major reports released from Japan recently but the low-tier leading indicators release printed a weaker than expected reading of 107%.

Commodity Currencies (AUD, CAD, NZD)

The bloodbath continued for the comdoll gang, as the Kiwi and Loonie underperformed. For the Kiwi, news of Fonterra’s product recall continued to add selling pressure while the Loonie was unable to draw buying power as Canadian banks were on a holiday. The RBA decided to cut interest rates by 0.25% in their rate statement today and surprisingly triggered a positive reaction from AUD. According to their statement, the RBA is concerned about global and domestic economic performance and analysts are pricing in another rate cut for the year.

By Kate Curtis from Trader’s Way

85

USD
The U.S. dollar weakened against most of its counterparts in yesterday’s trading, as risk appetite continued to stay in the markets. EUR/USD climbed above the 1.3300 handle while GBP/USD reached 1.5500. There were no major reports released from the US then, which explains why the currency was unable to draw any support. For today, the jobless claims data could renew demand for the dollar as the report is slated to show 336K in first-time unemployment claimants for the previous week.

EUR
The euro was able to hold on to most of its recent gains, as the German industrial production report printed stronger than expected results. The actual figure showed an increase of 2.4%, higher than the estimate of a 0.3% uptick and the previous month’s 0.8% decline. German trade balance and the ECB monthly bulletin are due from the euro zone today.

GBP
Pound trading was much more volatile yesterday as the BOE’s inflation report rocked the pound pairs. At first, the pound underwent heavy selling when BOE Governor Carney said that the interest rate will be tied to the jobless rate, which they want to see to drop to 7% before tightening. In addition, they specified that inflation and financial stability will also have a say in monetary policy adjustments. However, the pound was able to recover when the central bank upgraded their growth forecasts for this year and next year. No reports are due from the UK today.

CHF
Switzerland printed weaker than expected data yet the franc was still able to outpace most of its counterparts. The SECO consumer climate figure came in at -9 instead of improving from -5 to -2 while the CPI report showed a 0.4% decline in price levels, worse than the estimated 0.1% downtick. The Swiss jobless rate is due today and it’s expected to stay at 5.2%.

JPY
The yen continued to pack its gains against its counterparts in yesterday’s trading, although traders took profits prior to today’s BOJ interest rate statement. No monetary policy changes are expected but the policymakers might highlight the recent improvements in the Japanese economy and suggest that they could reduce stimulus, which could be positive for the yen.

Commodity Currencies (AUD, NZD, CAD)
The comdolls were able to recover against the Greenback during the US session, although the Loonie saw some weakness when Canada printed bleak figures. The Ivey PMI fell short of expectations and came in at 48.4 instead of climbing from 55.3 to 56.3. The building permits was also significantly weaker than expected at a 10.3% decline, worse than the estimate of a 2.5% drop. Australian jobs data was mixed, with the jobless rate holding steady at 5.7% and the employment change weaker than expected at -10.2K. Chinese trade balance is up for release within the day.

By Kate Curtis from Trader’s Way

86

USD
The dollar bounced back to action against some of its counterparts on Friday, as traders booked profits off their short trades ahead of the weekend. There were no major reports released from the US then, but the wholesale inventories release which turned out stronger than expected may have also lifted the Greenback. For today, only the Federal budget balance is up for release from the US and this isn’t likely to cause huge waves among dollar pairs, unless there are significant surprises.

EUR
EUR/USD retreated after reaching the 1.3400 major psychological level on Friday, but the pair could be ready to resume its climb this week. Weaker than expected data from France and Italy were responsible for the euro’s slide that day, although traders remain optimistic that the improvements in Germany could still provide support for the entire region. There are no reports due from the euro zone today though.

GBP
The pound was stuck in consolidation last Friday, even though the UK trade balance came in better than expected. The deficit stood at 8.1 billion GBP, smaller than the estimated 8.4 billion GBP shortfall and the previous 8.7 billion GBP deficit. There are no reports due from the UK today, which suggests that further consolidation could be in the cards.

CHF
The franc was able to hold on to its recent gains against the US dollar last week. There were no reports released from Switzerland on Friday yet the pair was able to take advantage of risk appetite and dollar weakness. Swiss retail sales are up for release today and an improvement from 1.8% to 1.9% is eyed. If the actual figure comes in strong, the franc could be in for more gains.

JPY
Japan printed weaker than expected consumer confidence last week, as the figure dipped from 44.3 to 43.6 instead of improving to 45.3. This reveals that not all Japanese citizens are confident that the economy is seeing improvements, in contrast to what government officials and BOJ policymakers believe. Earlier today, Japan’s preliminary GDP figure fell short of consensus as it printed 0.6% growth, lower than the estimate at 0.9%. Revised industrial production and preliminary machine tool orders data are due later today.

Commodity Currencies (AUD, NZD, CAD)
The comdolls continued to flex their muscles on Friday, as AUD/USD climbed to the .9200 mark while NZD/USD kept inching higher. What’s surprising though is that Chinese CPI came in weaker than expected at 2.7% instead of the 2.8% estimate while Canada’s jobs data fell short of consensus. Hiring fell by 39.4K in July instead of rising by 6.2K, bringing the unemployment rate up from 7.1% to 7.2%. There are no reports due from these economies today.

By Kate Curtis from Trader’s Way

87

USD
The Greenback enjoyed stellar gains in yesterday’s trading, as the US retail sales report came in better than expected. In particular, the core version of the report showed a 0.5% uptick, which is better than the estimate of a 0.4% increase, while the headline figure came in at 0.2% as expected. On top of that, the June figures enjoyed significant upward revisions, enough to convince most traders that the Fed will push through with its plans to reduce bond purchases in September. PPI figures are on tap today and these could be treated as clues on how the CPI data will turn out. Stay tuned for FOMC voting member Bullard’s speech as well.

EUR
The euro lost ground to the dollar in yesterday’s trading but managed to score some gains against the yen. German ZEW economic sentiment came in better than expected while the euro zone ZEW also beat expectations. However, euro zone industrial production fell short of consensus as the actual figure showed a 0.6% increase instead of the estimated 1.1% growth. For today, the euro could be in for strong moves as the GDP figures are up for release. Indications that the region could be out of the long recession could trigger a strong rally as early as the release of the French and German GDP around the start of the London session.

GBP
The pound posted strong gains against the yen and managed to hold on to its current levels against the dollar, as the UK printed CPI that was in line with expectations of a 2.8% increase. This means that inflation is still way above the central bank’s 2% target and that this might lead them to think about dialing back their stimulus sooner rather than later. Claimant count change is up for release today and another decline in joblessness is projected.

CHF
The franc gave way to dollar strength in yesterday’s trading as there were no major releases from Switzerland. Swiss PPI is up for release today and a 0.4% uptick in producer prices could be printed, which might be positive for the franc. On the other hand, lower than expected producer price inflation could worsen the ongoing franc selloff.

JPY
The yen lost a lot of ground in yesterday’s trading, brought in part by economic improvements in its currency counterparts. What really triggered the strong selloff though was a news report that revealed Abe is considering reducing corporate taxes in order to make up for the increase in consumption tax. He hopes to spur consumer spending and also encourage foreign investment in the process, leading to a strong Nikkei rally and a yen selloff. There are no reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)
There were no major reports released from Australia and Canada, as New Zealand was the only comdoll economy with data. The quarterly retail sales release came in stronger than expected as the headline figure showed a 1.7% increase while the core version of the report printed a 2.3% jump. There are no other reports due from the comdolls today so watch out for commodity price behavior and market sentiment to dictate price action.

By Kate Curtis from Trader’s Way

88

USD
The dollar weakened yet again in yesterday’s trading as the PPI reports turned out to be a disappointment while Bullard’s speech cautioned against easing too soon. This throws water at the Fed’s Septaper plans, considering how Bullard is a voting member of the FOMC. For today, CPI figures are up for release and it might be disappointing as well. Also due today are the initial jobless claims and a couple of manufacturing indices, which are likely to show improvements. However, weaker than expected data could continue to undermine the dollar’s performance for the rest of the week.

EUR
The euro zone is officially out of the recession, as seen from the GDP figures which printed growth of 0.3% versus the estimated 0.2%. However, this wasn’t good enough for the euro as the currency didn’t rally at all after the release. Instead, it even lost ground as some traders thought that the figures were not good enough. For today, banks in the euro zone are on a holiday so there might not be enough liquidity in the euro session.

GBP
The UK printed better than expected jobs data, as claimants dropped by nearly 30K again. This was enough to keep the jobless rate steady at 7.8%. For today, retail sales are up for release and a higher than expected growth of 0.7% is eyed compared to the previous 0.2% uptick. Another strong figure could lift the pound higher, possibly above 1.5600 against the dollar.

CHF
The franc lost ground to the dollar yet again even though Switzerland printed an improvement in its ZEW expectations report. This was probably because Swiss PPI came in weaker than expected as it printed a flat reading. No other reports are due from Switzerland for the rest of the day.

JPY
The yen continued showing signs of weakness as it lost appeal among traders. After all, Abe is going to impose a tax hike, and this could take its toll on consumer spending and businesses. There are no reports due from Japan today so the yen might take its cue from Japanese equities.

Commodity Currencies (AUD, CAD, NZD)
The comdolls were able to take advantage of dollar weakness in yesterday’s trading, as AUD/USD retested .9200 and NZD/USD landed back above .8000. There were no major reports, except for the New Zealand retail sales and the improvement in Australia’s Westpac consumer confidence figure. No other reports are due from the comdolls for the rest of the day.

By Kate Curtis from Trader’s Way

89

USD

As expected, the release of the FOMC meeting minutes did cause some waves among dollar pairs but the contents of the report didn’t contain a lot of surprises. After all, the meeting was conducted prior to the release of sentiment-changing reports recently, and traders are still looking for more clues in this week’s Jackson Hole Symposium. Bernanke is set to give the much-awaited keynote address and answer monetary policy questions in the following press conference. In addition, Janet Yellen, who is set to become the next Fed Chairman, is also going to participate in the press conference and it would be interesting to see how she assesses the US economy.

EUR

It’s a big day for the euro as PMI figures are up for release from Germany’s and France’s manufacturing and services sector. Last month, the better than expected results triggered a strong euro rally from the 1.3200 to 1.3400 area against the dollar, as these provided hope that the region is in recovery mode. For August, the flash reports are likely to show another set of upbeat figures, with some projected to climb above the 50.0 mark and show industry expansion. If that’s the case, EUR/USD could sustain its gains to new highs.

GBP

There are no major reports due from the UK today, leaving traders to price in their expectations for the upcoming release of the second quarter GDP figure tomorrow. Strong improvements in the UK economy could be incorporated in this figure, which might come in higher than the previous 0.6% estimate. Recall that traders were a bit disappointed with this figure, although it was higher than the predicted 0.3% uptick, and might get their hopes up for an upward revision. Another disappointment though could erase some of the pound’s recent gains.

CHF

Swiss trade balance is up for release today and might trigger some additional volatility for the franc. The surplus is expected to fall from 2.82 billion CHF to just 2.91 MILLION CHF, which would reflect lower export activity. If that’s the case, the franc could see its losing streak get extended.

JPY

There are no reports due from Japan yet again, leaving the yen vulnerable to risk sentiment. Take note that the potential of higher taxes is currently weighing on sentiment, as market watchers foresee lower spending and growth as a result of this. Stay tuned for updates from Japanese government officials though, as indications of compensating for these higher tax rates could still support the yen.

Commodity Currencies (AUD, CAD, NZD)

Australia is set to print its leading index while China will release the HSBC flash manufacturing PMI for August. Recall that this index, which mostly constitutes smaller industries, has been sliding deeper in contraction and another drop could be very negative for Australia while a bounce could keep AUD afloat. Canada is set to print its retail sales figures in today’s US session and possibly show downside surprises owing to the bleak jobs data for July.

By Kate Curtis from Trader’s Way

90

USD

It’s the last day of the trading week and, with the recent price swings, it could be time for most traders to book profits at the end of the week and avoid potential weekend gaps. After all, the Jackson Hole Symposium is still taking place until Saturday and there could be surprises that’d take place before the markets reopen on Monday. Only the new home sales report is up for release from the US today and this report could still have an impact on dollar movement, especially if the actual figures fall far behind or come in way above the estimate at 487K.

EUR

Only medium-tier data is due from the euro zone today, paving the way for smaller moves among euro pairs. Germany will print its final GDP reading for the second quarter and no changes are expected from the initial 0.7% figure. Belgium would release its NBB business climate index and possibly show a small improvement from -12.0 to -11.1.

GBP

The pound could be in for additional volatility before the week comes to a close since the UK will release the second estimate of its quarterly GDP for the second quarter of 2013. The initial estimate was at 0.6% and this wasn’t enough to please pound bulls at that time. However, an upward revision this time might be enough to extend the pound’s gains, as further growth is also eyed for the succeeding months.

CHF

Switzerland’s calendar is empty again for today, leaving USD/CHF at the mercy of market sentiment. Although there are hardly any major reports from other economies, the Jackson Hole Symposium might still have a few surprises lined up and might cause action for USD/CHF.

JPY

There are no reports due from Japan today so make sure you keep tabs on updates or speeches from Japanese government officials detailing what they plan to do with the country’s tax rates and how they can provide support to spending and growth. Other than that, pay attention to how Japanese equities are trading as well in order to predict sentiment for the Japanese economy.

Commodity Currencies (AUD, NZD, CAD)

There are no reports from Australia or New Zealand, as Canada is the only comdoll economy set to print economic figures for today. The CPI data is due during the US session and is expected to show a 0.1% uptick in headline consumer price levels and a flat reading for core price levels. Weaker than expected data could undermine Loonie strength, which has been a result of higher oil prices so far.

By Kate Curtis from Trader’s Way

91

USD

Dollar pair movement was mostly calm at the start of trading on Monday, as there were hardly any major catalysts save for the US durable goods orders data. Both core and headline figures turned out to be huge disappointments, as the core version printed a 0.6% decline while the headline figure showed a 7.3% drop. For today, CB consumer confidence and the Richmond manufacturing index are on tap. Consumer optimism is expected to retreat from 80.3 to 79.6 while the Richmond manufacturing index could improve from -11 to -7. Bear in mind though that another set of disappointments from the US could trigger a dollar selloff.

EUR

The euro remained mostly stable against the dollar in yesterday’s trading since there were no major reports released from the euro zone. For today, the German Ifo business climate report is up for release and it is expected to print a reading of 107.1, up from the previous 106.2. A higher than expected figure might push EUR/USD above its current consolidation below the 1.3400 mark and possibly push it to new highs.

GBP

Pound trading was restricted yesterday as UK banks were on holiday. Today, trading in the UK resumes and might cause a burst of volatility during the London open. There are no reports due from the UK though, as GBP/USD might take its cue from US data.

CHF

There were no major reports from Switzerland yesterday, leaving franc pairs stuck in consolidation for most of the trading sessions. USD/CHF saw a little bit of movement as the US printed poor durable goods orders figures. For today, Switzerland’s calendar is still empty, which suggests that franc pairs might be in for more sideways movement.

JPY

The yen lost ground against most of its counterparts in yesterday’s trading, although reports revealed that several major institutions cut back on their short positions. There are no reports due from Japan today, which means that the yen might continue trading on this sentiment or react to changes in market optimism.

Commodity Currencies (AUD, CAD, NZD)

Trading for the comdolls was relatively calm yesterday, as there were no major releases from Australia, New Zealand, or Canada. There are still no reports due from these economies today, which means that AUD/USD, USD/CAD, and NZD/USD might be in for much more consolidation across the charts or could be sensitive to the US release of durable goods orders data.

[By Kate Curtis from Trader’s Way

92

USD

The US dollar was still ahead of the pack in yesterday’s trading, as risk aversion stayed in the markets. As it turns out, the ongoing turmoil in Syria is causing traders to worry about a full-out war in the Middle East, which in turn could limit oil supply and have negative repercussions for overall growth. This has led to a rally in gold and other safer assets, including the US dollar. For today, pending home sales are up for release and a 0.2% rebound is expected to follow the previous 0.4% decline. Crude oil inventories are also due and a large decline in stockpiles could fuel more risk-off trades.

EUR

The euro managed to hold its ground against the dollar but was no match to yen strength. German Ifo business climate data came in better than expected, as the reading climbed from 106.2 to 107.5, higher than the estimate at 107.1. For today, German GfK consumer climate data is due along with Germany’s import prices. Strong data from the euro zone could allow the euro to stay resilient against its counterparts should risk aversion remain in the markets.

GBP

The pound gave up more ground to the dollar and the yen, as a result of risk aversion. There were no reports released from the UK in yesterday’s trading, which was why the currency was unable to draw any support. For today, CBI realized sales are up for release and an improvement from 17 to 19 is eyed. Also today, BOE Governor Carney will be giving a speech and possibly highlight the recent improvements in the UK economy.

CHF

The franc was beat up by the US dollar in yesterday’s trading when traders bought up lower-yielding currencies. Today’s release of the UBS consumption indicator could provide some support for the Swiss currency if the actual figure comes in higher than the previous 1.44 reading. Otherwise, the franc could continue to lose ground to the U.S. dollar if risk aversion stays.

JPY

The yen emerged victorious in yesterday’s trading as risk off flows benefitted the Japanese currency. There were no releases from Japan yesterday and none are due today so the yen’s movement could continue to depend on market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were no match to dollar strength, although the Loonie managed to pare some of its losses. The reason is that the ongoing turmoil in Syria is causing a run to the safe-haven assets but is also lifting oil prices, which is good for the Canadian dollar. For today, there are no major reports due from any of the comdoll economies but the US crude oil inventories report might have an impact on the Canadian dollar.

By Kate Curtis from Trader’s Way

93

USD

The dollar had a mixed performance in yesterday’s trading, although it did manage to store some gains against most of its counterparts. EUR/USD dipped to the 1.3305 area while GBP/USD traded below the 1.5500 handle briefly. The tension in Syria is still playing a role in risk sentiment and the possibility of a military strike is keeping traders from stocking up on higher yielding currencies. However, crude oil inventories were better than expected and showed that an oil supply shock hasn’t taken place yet. For today, the US revised GDP is due and an upward revision from 1.7% to 2.2% is expected.

EUR

German data has been mostly supporting the euro in the past few trading days, as data from periphery nations has turned out weaker than expected. However, yesterday’s release of German consumer climate data turned out to be a disappointment also, as the actual figure dipped from 7.0 to 6.9 instead of improving to 7.1. German jobs figures are up for release today and an increase of 5K in hiring is projected.

GBP

The pound sold off initially when risk aversion was still dominating price action but it rebounded when Governor Carney spoke and mentioned his positive outlook for the UK economy. There are no reports due from the UK today, which suggests that GBP/USD could move to the tune of US data or risk sentiment.

CHF

The franc lost ground to both the euro and the dollar yesterday, as risk aversion kept its head in the markets. For today, Swiss employment level is up for release and it’s expected to show a drop from 4.15M to 4.14M, which might be negative for the franc. Although strong figures could still provide support for the Swiss currency, overall risk sentiment could still favor lower-yielding currencies.

JPY

The yen still packed some gains against most of its counterparts as risk aversion from the potential military strike in Syria still kept lower-yielders on top. There are no reports due from Japan recently as a round of Japanese data are due on Friday, which might lead to more volatility and direction among yen pairs.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were able to recover slightly in earlier trading sessions but ended up mostly returning their gains to the dollar. The rise in gold and oil prices is having less of an effect on correlated currencies, as risk aversion is still a bigger theme in the markets. Only medium tier reports are due from Canada for the US session while New Zealand’s ANZ business confidence report churned out a weak result and reflected business pessimism.

By Kate Curtis from Trader’s Way

94

USD

The dollar continued to flex its muscles in yesterday’s trading, as strong US GDP was responsible for boosting the safe-haven Greenback. The GDP reading for the second quarter of the year was revised up from 1.7% to 2.5%, higher than the estimate at 2.2%. This was enough to prompt traders into believing that the Septaper is a go. Meanwhile, tensions in Syria seem to have a limited impact on currency behavior recently, although the possibility of a military strike is still present. Medium-tier US data such as core PCE price index, personal spending and income, and revised UoM consumer sentiment reports are on tap.

EUR

The euro lost a lot of ground to the dollar in yesterday’s trading but managed to consolidate against the yen. German data was weaker than expected, as CPI remained flat instead of jumping by 0.2% while joblessness increased by 7K instead of dropping by 5K. This was enough to erase the jobs gains seen in the previous month, hinting that Germany could be in for weaker growth prospects. German retail sales figures are due today and a rebound is eyed, although a downside surprise could result from the recent decline in hiring.

GBP

The pound was also one of the weaker currencies in yesterday’s trading as there were no major reports to support it. Earlier today, the GfK consumer confidence figure turned out better than expected and improved from -16 to -13. More medium-tier releases are due from the UK today, such as the Nationwide HPI, net lending to individuals, and mortgage approvals.

CHF

The franc was still victim of dollar strength in yesterday’s trading but it managed to recover some of its recent losses against the euro. Switzerland’s employment level was better than expected as it improved from 4.15M to 4.17M instead of dipping to 4.14M. Switzerland will release its KOF economic barometer later today and possibly show an improvement from 1.23 to 1.34.

JPY

The yen was mostly stuck in consolidation against its counterparts, as EUR/JPY consolidated above 130.00 while USD/JPY formed a symmetrical triangle. This was perhaps because traders were awaiting this day’s set of data, which came in mixed. Manufacturing PMI improved from 50.7 to 52.2 while household spending fell short at 0.1% instead of the estimate at 0.4%. CPI figures on the national and Tokyo level were improvements over previous ones, suggesting that the BOJ’s recent easing efforts are still working.

Commodity Currencies (AUD, CAD, NZD)

The comdolls were still no match to dollar strength yesterday, as risk aversion and strong US GDP made the Greenback nearly invincible. However, data from Australia and Canada still came in better than expected. Australian private capital expenditure rose by 4.0% while Canada reported a smaller than expected current account deficit. Canadian monthly GDP is on tap for today and a drop of 0.4% in growth is expected for June, following the previous 0.2% expansion.

By Kate Curtis from Trader’s Way

95

USD

The dollar is still reigning supreme in the markets as talks of a US military strike are still on the table. Obama is currently consulting Congress on whether the US forces will be allowed to launch an airstrike or not, and their decision could make a huge impact on currency trading in the near term. As for data, the calendar is empty for today as US traders are off on Labor Day. Expect liquidity to pick up when US traders return tomorrow.

EUR

The euro is still consolidating against the dollar and appears to have ignored the recent improvements in Spanish and Italian PMIs. EUR/USD is still hovering above the 1.3200 handle and a clean break might send the pair to 1.3000. No other reports are due today as traders could react to risk sentiment or price in expectations for the ECB rate decision on Thursday.

GBP

The pound gapped up over the weekend and is showing strong upside potential, as the rising trend line on GBP/USD is holding. UK manufacturing PMI came in much better than expected at 57.2, outpacing the expected 55.2 reading and upping the odds for a hawkish BOE rate statement later on in the week.

CHF

The franc struggled to hold on to its recent levels as risk aversion continued to weigh on the European currencies. SVME PMI came in weaker than expected at 54.6 versus the estimate at 55.9 and the previous reading of 57.4. There are no other reports due from Switzerland today as the downturn in manufacturing might keep weighing on the franc.

JPY

The yen was sold off sharply towards the end of the Asian session today as news of the approval of Abe’s corporate tax hit the airwaves. This could potentially weigh on business spending and overall economic growth, probably erasing some of the progress created after the BOJ eased policy. The central bank is set to make another rate decision within the week but no changes are expected.

Commodity Currencies (AUD, CAD, NZD)

The comdolls gapped up against the dollar over the weekend as some traders booked profits ahead of Labor Day. However, risk remains off as the possibility of a full-blown war in Syria isn’t off the table yet. Australian building approvals beat expectations while China is showing signs of a rebound in manufacturing, helping lift comdolls for the meantime. No other reports are due from these economies today.

By Kate Curtis from Trader’s Way

96

USD

The dollar still managed to gain against most of its major counterparts although the recent rallies seem weaker. USD/JPY broke to the upside of the symmetrical triangle on the 4-hour time frame but the pair is stalling at the previous week highs. There were no reports released from the US since traders were on a Labor Day holiday, but liquidity is expected to pick up strongly in today’s New York session as traders return to their desks. US ISM manufacturing PMI could be a major market mover today and a small decline from 55.4 to 54.2 is expected.

EUR

The euro zone printed strong improvements in its manufacturing sector, allowing its overall manufacturing PMI to hold at 51.3 for August. Spain and Italy printed record-high figures, but this seemed to be ignored by EUR/USD which was mostly driven by risk sentiment and the possibility of a Septaper. For today, Spanish unemployment change and euro zone PPI figures are up for release.

GBP
The pound enjoyed some gains when the UK printed a sharp increase in its manufacturing PMI from 54.8 to 57.2, marking its highest level in more than two years. This ups the odds for a higher than expected construction PMI due today and a better services PMI reading due later on this week. Construction PMI is expected to climb from 57.0 to 58.4, reflecting a stronger expansion in the industry.

JPY

The yen lost ground to its counterparts yesterday as Abe got support for his proposed sales tax increase. This was enough to push USD/JPY above the 99.25 resistance area and most yen pairs above their inflection points. There are no reports due from Japan today, which suggests that yen pairs could be swayed by risk sentiment mostly.

CHF

The franc lost ground to the euro and the Greenback in yesterday’s trading as the Swiss SVME PMI turned out to be a disappointment. The figure slipped from 57.4 to 54.6, reflecting a slower expansion in the Swiss manufacturing industry. Swiss GDP is up for release today and a lower growth figure of 0.3% is expected for Q2 2013, down from the previous 0.6% reading.

Commodity Currencies (AUD, NZD, CAD)

Australia recently printed bleak reports in the form of its retail sales and current account balance. Spending was up by a mere 0.1% instead of the estimated 0.4% uptick while the current account showed a deficit of 9.4 billion AUD. However, support from the recent improvement in Chinese manufacturing is still keeping AUD and NZD afloat. The RBA kept rates unchanged at 2.5% as expected, lending more support for AUD pairs. No reports are due from New Zealand and Canada today.

By Kate Curtis from Trader’s Way

97

USD

The US dollar continued to assert its dominance on the charts in yesterday’s trading, although it lost some ground to the Aussie and Kiwi. US data was stronger than expected, with the ISM manufacturing PMI climbing from 55.2 to 55.7 instead of dipping lower for the month of August. At the same time, the growing possibility of a US military strike on Syria is weighing on risk appetite and lifting the lower-yielding Greenback. Data due today is the trade balance, which is likely to show a wider deficit, and the Beige Book report.

EUR

The euro dipped to new lows against the U.S. dollar, as the Spanish unemployment change report printed a flat reading and put a halt to the country’s positive streak in hiring. For today, the euro zone is set to print services PMIs from Spain and Italy, both of which aren’t likely to have a huge impact on EUR/USD, based on the previous non-reaction to the manufacturing PMIs. Euro zone retail sales are also due today and a 0.5% rebound is eyed.

GBP

The pound had a topsy-turvy trading against the dollar as the UK construction PMI also came in strong but failed to sustain GBP/USD’s rally. As it turns out, risk aversion still played a huge role in price action of dollar pairs yesterday. Services PMI is due from the UK today and another upside surprise is likely.

CHF

The franc posted some gains against its counterparts when the Swiss GDP was released. The actual figure was stronger than expected at 0.5% versus the estimate at 0.3%, but still lower than the previous 0.6% growth figure. There are no reports due from Switzerland today, which suggests that franc trading could depend on market sentiment or its counterparts’ data.

JPY

The yen continued to lose ground against most of its counterparts as the possibility of a sales tax increase fueled speculations of further easing from the BOJ. Although Abe stated that he won’t be making the decision until October, analysts are starting to price in the likelihood of more stimulus from the central bank as early as their rate statement this week. No reports are due from Japan today as traders could start positioning ahead of the BOJ statement tomorrow.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar exhibited some resilience yesterday and earlier today, when the GDP report came in line with expectations. The actual report showed 0.6% growth, but the previous quarter’s reading was revised lower. Still, this was enough to push AUD/USD above the .9050 level. Canada will print its trade balance later on today and possibly show a smaller deficit, but the bigger mover for the Loonie is the BOC rate statement. No actual changes are expected so stay tuned for Poloz’s accompanying statement

By Kate Curtis from Trader’s Way

98

USD

The dollar returned some of its recent gains yesterday, as traders covered their short positions ahead of the event risks for today. In particular, EUR/USD bounced back to the 1.3200 handle while GBP/USD rallied above the 1.5600 mark. There were no major releases from the US yesterday, except for the Beige Book report which revealed that the economic expanded at a “modest to moderate” pace recently. For today, ADP jobs data and ISM non-manufacturing PMI are up for release. After rising by 200K in July, a 175K increase in ADP hiring is expected for August. Meanwhile, the ISM non-manufacturing PMI is projected to dip from 56.0 to 55.2.

EUR

The euro recovered against most of its major counterparts yesterday, as traders booked profits ahead of today’s ECB rate decision. No monetary policy changes are expected but it will be interesting to see whether Draghi acknowledges the recent improvements in euro zone’s large nations or not. Upbeat remarks could keep the euro afloat while words of caution could force it to retreat. Euro zone retail sales was weaker than expected at 0.1% for July while the GDP report showed no revisions for the 0.3% growth figure in Q2 2013.

GBP

The pound extended its gains in yesterday’s trading, as the services PMI turned out better than expected. The figure climbed from 60.2 to 60.5 instead of dipping to 59.3. Services comprises a majority of overall UK economic activity so it’s understandable why the pound jumped after the strong release. Today the BOE will make its interest rate decision and no changes are expected since Carney already adopted forward guidance and said that no hikes should be expected for the near term.

CHF

The franc was stuck in choppy trading against the US dollar yesterday while EUR/CHF managed to make headway. There were no reports released from Switzerland yesterday and none are due today, which suggests that more choppy trading could be seen unless US or euro zone events provide direction.

JPY

The yen was still under heavy selling pressure yesterday as traders continued to price in their expectations regarding the proposed sales tax. The BOJ will be making its rate decision within the day and market participants will hear of whether the central bank is planning on making any stimulus adjustments to make up for the potential impact of the sales tax on growth.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was on a roll yesterday, as the GDP came in line with consensus at 0.6%. For now, both AUD and NZD are rallying on the heels of strong Chinese reports earlier this week while the Loonie is stuck in consolidation against the US dollar. No reports are due from these economies today so comdoll trading could depend on US data or risk sentiment.

By Kate Curtis from Trader’s Way

99

USD

The US dollar extended its rally against its major counterparts, as the US ISM non-manufacturing PMI turned out better than expected. The actual figure climbed from 56.0 to 58.6 instead of falling to the estimate at 55.2. The ADP non-farm employment change was slightly below expectations but this doesn’t take away the possibility of a strong NFP release for today. The August reading is expected to come in at 178K, higher than the previous month’s 162K reading. A lower than expected figure might cast doubts on the Fed’s Septaper and trigger a dollar selloff.

EUR

The euro sold off sharply during the ECB press conference that followed their interest rate decision. Governor Draghi mentioned that policymakers had discussed the possibility of lowering interest rates, as the recovery in the euro zone is still faced with several potential risks. He upgraded the growth forecast for the year, although the region is still expected to stay in contraction, then downgraded the GDP forecast for 2014. Only medium-tier reports are due from the euro zone today and these aren’t likely to have a huge impact on euro movement.

GBP

The pound struggled to sustain its momentum in yesterday’s trading, as GBP/USD was weighed down by dollar strength. There were no major releases from the U.K. yesterday, as traders focused on the BOE rate decision. Carney did not make any huge waves since he simply reiterated his forward guidance and said that rate hikes aren’t to be expected in the near term. For today, UK manufacturing production and trade balance data are up for release. Manufacturing is expected to rise by 0.3%, weaker than the previous 1.9% jump.

CHF

The franc lost a lot of ground to the dollar but managed to rally against the euro. There were no reports released from Switzerland yesterday while today’s schedule has Swiss foreign currency reserves and CPI on tap. Reserves are slated to rise above the previous 434.9 billion CHF reading while inflation could stay flat. Weaker than expected readings could mean more losses for the franc.

JPY

The yen was still under heavy selling pressure, although the BOJ did not announce any actual monetary policy changes. Kuroda highlighted the recent improvements in the Japanese economy but also noted that the central bank is ready to ease further if the upcoming increase in sales tax weighs on overall economic activity. No major reports are due from Japan today, as the yen could keep selling off on the prospect of further BOJ easing.

Commodity Currencies (AUD, NZD, CAD)

The comdolls lost a bit of ground to the dollar in yesterday’s trading but were quick to bounce back in today’s Asian session. Australia printed a weak trade balance and actually showed a deficit, reflecting a downturn in export activity, particularly to China. Canada is set to print its jobs data and Ivey PMI later today. Employment could rebound by 21.2K while manufacturing could improve from 48.4 to 52.6.

By Kate Curtis from Trader’s Way

100

USD

The dollar gave back some of its recent gains on Friday, when the NFP release printed a weak figure. The actual result showed a mere 162K increase in hiring instead of the estimated 178K rise. On top of that, the previous month’s figure was revised lower to 104K. Although the jobless rate improved, it was mostly a result of a drop in participation rate. This was enough to cast doubts on the Septaper, as many knew that the Fed was looking at the jobs sector to determine how much it would reduce bond purchases. There are no major reports due from the US today.

EUR

The euro rebounded against the dollar on Friday, as it took advantage of the weak NFP release. The pair was able to rally from the 1.3100 area back to 1.3150. Data from the euro zone was actually weak then, as Germany printed a lower than expected industrial production figure and a smaller than expected trade surplus. Only the Sentix investor confidence report is due from the euro zone today and isn’t likely to cause a huge impact on the shared currency’s movement.

GBP

The pound was selling off during the London session, as UK data such as manufacturing production were both weak. However, the weak US NFP reading allowed GBP/USD to rally back to the 1.5600 area. For today, the UK schedule is free from any economic reports so pound trading could rely on risk sentiment.

CHF

The franc recovered against the dollar last Friday, although Swiss data was actually weaker than expected. Swiss CPI printed a 0.1% decline in price levels, lower than the estimated flat reading. This followed the previous 0.4% decline, prompting some to worry about deflation in Switzerland. Swiss retail sales are due today and a strong rebound from 2.3% to 3.2% is expected.

JPY

The yen regained strength against the dollar on Friday but USD/JPY gapped up over the weekend on renewed support for Abe’s sales tax increase. Japanese data also came in mostly weaker than expected earlier today, as the final GDP reading was revised down from 1.0% to 0.9%. No other reports are due from Japan for the rest of the day as the prospect of the sales tax increase could keep hurting the yen.

Commodity Currencies (AUD, NZD, CAD)

The comdolls packed in strong gains against the dollar starting on Friday, as the weak NFP reading dragged the Greenback down. The Australian dollar tested the .9200 resistance while NZD/USD jumped above .8000. Canadian building permits are due in the US session and a strong figure could keep boosting the Loonie. Earlier today, Chinese inflation data came in line with consensus at 2.6%. There are no other reports due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader’s Way

101

USD

The dollar started Monday off on a weak note, as it continued to selloff after Friday’s NFP fiasco. The weak jobs report prompted traders to worry if the September will push through, leading to an unwinding of some dollar long positions. Consumer credit data from the U.S. revealed a slight downturn, hinting at a drop in spending and confidence. No major reports due from the U.S. today could mean that risk sentiment will dominate price action for dollar pairs.

EUR

The euro extended its gains against the dollar and yen in yesterday’s trading, although a fresh batch of worries could be present in the euro zone. Italian officials are trying to unseat Silvio Berlusconi from the Senate because of the charges he is facing, reviving political troubles in Italy. A snap election could lead to a hung parliament, which might make it more difficult to implement fiscal reforms. As for data, only the French industrial production report is due today and it isn’t likely to spur large moves for the euro.

GBP

The pound was able to trump the dollar and the yen yesterday, as GBP/USD climbed to the 1.5700 handle. There were no economic reports released from the UK, as the pound simply took advantage of dollar weakness and the improvement in risk sentiment. For today, the UK just reported a huge jump in its RICS house price balance, providing more support for the pound. Later today, the UK will hold its 30-year bond auction.

CHF

Swiss retail sales came in weaker than expected, but it wasn’t enough to stop the franc from rallying against the dollar. Spending increased by only 0.8%, a fourth of the estimated 3.2% jump and less than half the previous 2.3% increase. This spells negative prospects for Swiss economic growth, which might later on weigh on the franc. There are no reports due from Switzerland today so the franc pairs could take their cue from US or euro zone reports.

JPY

The yen continued to sell off against its major counterparts, as data from Japan hinted at further weaknesses. The BOJ monetary policy meeting minutes contained no surprises but the policymakers did express their openness to further easing if necessary. Japan released its tertiary industry activity index today and showed a 0.4% decline. The 30-year bond auction is scheduled later today.

Commodity Currencies (AUD, CAD, NZD)

The comdolls were big winners in Monday’s trading, as the improvement in risk appetite and dollar weakness allowed the Aussie, Kiwi, and Loonie to extend their gains. AUD/USD broke above the key .9200 handle while NZD/USD solidified its stay above the .8000 mark. Australian NAB business confidence showed an improvement from -3 to 6, reflecting a return to optimism. Chinese fixed asset investment, retail sales, and industrial production are due today.

By Kate Curtis from Trader’s Way