Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
122

USD

The US dollar struggled to hold its ground at the start of the week as the continued government shutdown discouraged traders from taking long dollar positions. The consumer credit report came in better than expected and reflected stronger consumer spending but did very little to support the Greenback. A couple of medium-tier reports are up for release today but these are not likely to spur dollar strength, unless the risk off environment starts to favor the Greenback as well.

EUR

The euro started Monday on a weak note but was able to stage a decent rebound towards the end of the US session. Euro zone Sentix investor confidence was weaker than expected, as the reading fell from 6.5 to 6.1 instead of improving to the estimate at 10.9. The Final GDP reading saw no revisions from the 0.3% figure. German and French trade balance are up for release today, as well as the German factory orders report. Another round of weak figures from the euro zone could prevent EUR/USD or EUR/JPY from making any headway.

GBP

The pound was able to make a nice comeback on Monday, although there were no major reports released from the UK. Perhaps traders are recovering from the sharp selloff last Friday and starting to price in expectations for the BOE rate decision later this week. The RICS house price balance released earlier today came in better than expected and might be enough to support pound pairs throughout the day.

CHF

The franc extended its wins against the US dollar during the NY session, although it did sell off at the start of the week. Swiss foreign currency reserves data showed a decline, which means that it is becoming less expensive for the SNB to maintain its franc peg. Swiss unemployment rate is up for release today and it is expected to hold steady at 3.2%. Swiss CPI and retail sales are also up for release.

JPY

The yen was able to benefit from the risk off market environment on Monday, as it packed in gains against its higher-yielding counterparts. Data from Japan was slightly weak, as the leading indicators index fell from 107.8% to 106.5%, lower than the estimate at 106.9%. Japan’s current account balance missed the mark, as it rose from 0.33T JPY to 0.35T, short of the estimate at 0.65T JPY. The Economy Watchers sentiment index is up for release within the day and an improvement is expected.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to recover from the weak start on Monday as the continued government shutdown in the US dwindled demand for the dollar. Canadian building permits came in weaker than expected, as the report showed a 21.2% slide instead of the estimated 2.4% drop. New Zealand reported an improvement in its NZIER business confidence figure from 32 to 38 while Australia’s ANZ job advertisements indicated a 0.2% uptick. Canadian trade balance and housing starts are also due today.

By Kate Curtis from Trader’s Way

123

USD

The US dollar was able to make a quick bounce in the Asian session but gave up its intraday gains back to its major counterparts, as the lawmakers in Washington still haven’t reached a deal on the budget. This means that the shutdown in the government has carried on for more than a week, weighing on overall economic growth. Data from the US was weaker than expected, as the NFIB small business index fell from 94.1 to 93.9 instead of improving to 95.2. FOMC meeting minutes are up for release today and it will be interesting to see how the U.S. government shutdown factored in the Fed’s decision back in September.

EUR

The euro struggled to hold on to its current levels against the dollar and the yen yesterday, as data came in mixed. Germany’s trade balance printed a stronger than expected reading but the gains from this report were wiped out by the weaker than expected factory orders release. German industrial production data is up for release today and a 1.1% increase is expected. Draghi is set to give a speech and possibly cause some volatility for euro pairs around 11:00 pm GMT.

GBP

The pound suffered a sharp selloff at the start of the London session, as a news report erroneously said that the BOE implemented additional LTRO when it just turned out to be their normal repo operations. Pound pairs were able to recover to their previous levels instantly, although there were no major reports released from the UK around that time. For today, UK manufacturing production and trade balance numbers are up for release. Manufacturing production could show a 0.3% increase while the trade balance could show a smaller deficit.

CHF

The franc was simply stuck in consolidation against the euro and the dollar, despite the round of strong data from Switzerland. CPI came in at 0.3% versus the estimated 0.2% reading while retail sales printed a 2.4% jump instead of the 1.7% projected increase. The jobless rate held steady at 3.2% as expected. No reports due from the franc today could mean more consolidation for USD/CHF and EUR/CHF.

JPY

The yen was able to rake in some more gains against its counterparts, as the lower-yielding Japanese currency kept benefitting from risk aversion. USD/JPY edged lower during the U.S. session and so did EUR/JPY. The Economy Watchers sentiment index printed a higher than expected reading of 52.8, also an improvement over the 51.2 reading seen previously. For today, BOJ monetary policy meeting minutes are up for release along with the preliminary machine tool orders report.

Commodity Currencies (AUD, NZD, CAD)

AUD/USD and NZD/USD were mostly stuck in their current ranges while USD/CAD had an upside breakout on the heels of weak Canadian data. The trade balance widened to 1.3 billion CAD versus the estimated drop to 0.7 billion CAD, while the previous reading was revised to show a larger deficit. Westpac consumer sentiment data in Australia released earlier today printed a 2.1% decline, weighing on AUD/USD in today’s early Asian session. New Zealand will be printing its Business NZ manufacturing index at 11:00 pm GMT.

By Kate Curtis from Trader’s Way

124

USD

The U.S. dollar was able to bounce back to action yesterday, but it remains to be seen whether this is just a temporary pullback. The FOMC minutes showed that policymakers were open to tapering within the year, but this was before the week-long government shutdown took place. They did mention that they were concerned about budget cuts and the debt ceiling’s impact on economic performance. Obama’s nomination of Janet Yellen was also received positively by U.S. markets, as many anticipated continued stimulus under her watch.

EUR

The euro was sold off against the dollar and the yen yesterday, as risk aversion took hold of the markets. German industrial production increased by 1.4%, higher than the estimated 1.1% rise, while the previous month figure was revised to show a smaller decline. French industrial production data is up for release today and a strong figure could help the euro extend its gains.

GBP

The pound suffered a heavy selloff yesterday since the UK printed a bleak manufacturing production figure. The reading showed a 1.2% decline for September instead of the estimated 0.3% uptick. For today, the BOE will make its interest rate decision and no monetary policy changes are expected. A hawkish statement could be in the cards, as Carney has previously remarked that further QE won’t be necessary. However, the recent downturn in PMIs and production could cause him to shift his stance.

CHF

The franc lost ground to the U.S. dollar in yesterday’s trading, pushing USD/CHF back above the .9100 handle. There were no reports released from Switzerland, as the move was mostly spurred by dollar strength. There are no reports due from Switzerland today, leaving USD/CHF at the mercy of U.S. data and risk sentiment once more.

JPY

The yen was tugged around in yesterday’s trading battle, as weak preliminary machine tool orders data caused a yen selloff but today’s set of strong Japanese reports allowed it to rebound. Core machinery orders jumped by 5.4% versus the estimated 2.9% rise while the tertiary industry activity index showed a 0.7% uptick. Data on consumer confidence is due today and it is expected to show a climb from 43.0 to 43.8

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to hold their ground against the dollar yesterday, as the Loonie was the only currency that posted significant losses. Today, however, the Australian dollar dipped when the jobs report came in mixed. Hiring was weaker at 9.1K but the jobless rate improved from 5.8% to 5.6%. No other reports are due from the comdoll economies for the rest of the day so expect U.S. data or risk sentiment to drive price action for these pairs.

By Kate Curtis from Trader’s Way

125

USD

The dollar carried on with its recovery on Thursday, as risk remained off but traders started pricing the possibility that Washington will come up with a budget deal over the weekend. Profit-taking scenarios similar to last week’s dollar rallies on Friday could take place in anticipation of a deal in the next few days. As for data, US initial jobless claims came in worse than expected at 374K versus the estimate at 307K. For today, US preliminary UoM consumer sentiment data is up for release and a small dip from 77.5 to 77.2 is eyed.

EUR

The euro lost ground to the dollar during yesterday’s Asian session but managed to make a good comeback during the London session. Data from the euro zone was actually weaker than expected, as French industrial production fell short of consensus. Only medium-tier reports are due from the region today and these aren’t likely to spur huge moves among euro pairs.

GBP

The pound was stuck in consolidation prior to the BOE interest rate decision. The pairs made a bit of headway afterwards, as the central bank decided to keep monetary policy unchanged. They kept rates on hold at 0.50% and their asset purchase program at 375B as expected. Only the UK CB leading index is due today and a small uptick is expected, but a weaker than expected reading might undermine pound strength.

CHF

The franc struggled to reverse its recent losses to the dollar, as USD/CHF tested the .9100 handle. There were no reports released from Switzerland yesterday and none are due today, which suggests that USD/CHF movement could be driven by U.S. events or potential profit-taking ahead of the weekend.

JPY

The yen lost ground to its counterparts as the Nikkei stock index posted some gains. USD/JPY rallied to the 98.00 area while CAD/JPY broke above the 94.00 mark. BOJ Governor Kuroda is set to give a speech today and possibly spur some volatility among yen pairs. No other major events are lined up for Japan.

Commodity Currencies (AUD, NZD, CAD)

The comdolls lost ground to the dollar as risk aversion set in while dollar sentiment improved. Jobs data from Australia was mixed, with a better than expected jobless rate of 5.8% but a weaker than expected rise in hiring. Canada’s housing price index came in weaker than expected, deepening the Loonie’s slide. There were no reports released from New Zealand yesterday and none are due today. Canada will print its jobs data and possibly show slower hiring of 15.3K versus the previous 59.2K figure.

By Kate Curtis from Trader’s Way

126

USD

The US dollar erased some of its progress in the past trading days as the government shutdown and budget impasse continues. President Obama has still rejected the latest proposal for spending cuts, despite the round of negotiations conducted last week. There’s no report on the US schedule for today since banks are on holiday in observance of Columbus Day so watch out for low liquidity and high volatility in today’s price action.

EUR

The euro edged slightly higher to the dollar on Friday, mostly because of USD weakness rather than actual euro strength. Data from the euro zone has been in line with consensus, as the German final CPI reading stayed flat while the wholesale price index showed a 0.7% uptick. For today, euro zone industrial production is up for release and a 0.8% rebound is eyed to follow the previous 1.5% decline. Eurogroup meetings are also set to start today.

GBP

The pound ended another day in the red against the US dollar, although GBP/USD has been finding support around 1.5950. There were no reports released from the UK on Friday and none are due today, so pound trading could be subject to risk flows.

CHF

The franc pretty much finished off where it started on Friday, as there were no reports released from Switzerland then. There are still no reports up for release today so more consolidation could be seen, but be mindful of the impact of U.S. budget updates on risk sentiment.

JPY

The yen gave up a lot of its recent gains on Friday as the improvement in risk sentiment led to a selloff for the lower-yielding currency. There hasn’t been much in terms of data but medium-tier releases have printed stronger than expected results last week. Japanese banks are on holiday today so expect either quiet trading or high volatility from low volumes.

Commodity Currencies (AUD, NZD, CAD)

Thanks to the improvement in sentiment, comdolls were able to make headway on Friday. The Canadian dollar was also supported by the improvement in Canada’s hiring sector, although the actual employment change figure fell short of consensus. There are no reports due from these economies today but watch out for the release of Chinese CPI, as this could have an effect on the Australian dollar. Higher inflation of 2.8% is expected compared to the previous 2.6% reading.

By Kate Curtis from Trader’s Way

127

USD

The US government shutdown is still ongoing as the White House rejected the latest proposal from the House Republicans regarding spending cuts on healthcare. Meanwhile, the Senate hasn’t come up with a plan regarding raising the debt ceiling before the deadline approaches on October 17. Data from the US was weaker than expected as the Empire State manufacturing index printed a decline instead of the expected improvement. For today, there are no major reports but the Fed Beige Book is up for release. Updates on the budget and debt talks could drive dollar movement today.

EUR

The euro ignored strong data from Germany as it still lost ground to both the dollar and yen yesterday. German ZEW economic sentiment climbed above the 50.0 level, reflecting optimism about the outlook for the euro zone’s largest economy. Meanwhile, the ZEW figure for the entire region was slightly weaker than expected but still indicative of optimism. For today, only euro zone CPI figures are up for release and these aren’t expected to have a huge impact on euro price action.

GBP

The pound managed to consolidate against the US dollar in yesterday’s trading as CPI figures came in stronger than expected. The headline figure showed a 2.7% increase while the core figure printed a 2.2% rise. This was enough to convince traders that the BOE isn’t likely to increase stimulus soon and might even consider reducing easing if inflation keeps rising. For today, UK jobs data are up for release and a 24.3K drop in claimants is expected. If that’s the case, the jobless rate could hold steady at 7.7%.

CHF

The franc lost ground to the dollar in yesterday’s trading as there were no reports from Switzerland to keep it supported. Swiss ZEW economic expectations data is up for release today and another increase could be reported, which might allow the franc to rebound against the dollar.

JPY

The yen was able to end stronger against its major currency counterparts yesterday when risk aversion stayed in the markets. There are no reports due from Japan today so traders will probably use risk sentiment to drive yen flows. Take note also that the parliamentary session geared towards fine tuning the details of the next set of stimulus efforts is already underway so any updates could also move yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to stay resilient against the dollar, particularly the Aussie and the Kiwi. The Loonie was unable to hold its ground as a potential default in the US would also be very damaging to Canada’s economy. New Zealand CPI came in stronger than expected at 0.9%, which means that the RBNZ would have enough room to reduce stimulus if needed. Canadian manufacturing sales are due in today’s US session and could show a 0.3% increase.

By Kate Curtis from Trader’s Way

128

USD

The US dollar regained ground against the major currencies as U.S. lawmakers passed a bill to raise the country’s debt ceiling and avoid defaulting on its loans. This was enough to spark a brief relief rally for the dollar as traders expected the U.S. government to end the shutdown soon. In terms of data, there hasn’t been much from the U.S. as traders are looking at earnings reports instead. US initial jobless claims and Philly Fed index are up for release today, with claims expected to drop from 374K to 357K for the past week and the manufacturing index slated to dip from 22.3 to 15.4.

EUR

The euro lost some ground to the dollar on the heels of the House-approved debt ceiling bill. Euro zone CPI and core CPI simply came in line with expectations, as the headline figure showed a 1.1% increase while the core CPI printed a 1.0% uptick. Euro zone current account is up for release today and it’s expected to show a larger surplus of 17.7 billion EUR compared to the previous 16.9 billion EUR, but this release is not expected to have a huge impact on euro trading.

GBP

The pound rallied after the UK printed better than expected jobs data but it lost ground later on, as the US Senate passed the bill to raise the debt limit. UK claimant count change fell to its lowest level in five years, as the figure clocked in a 41.7K drop in the number of people claiming jobless benefits. This kept the jobless rate steady at 7.7%. For today, UK retail sales are up for release and another upside surprise might be in the cards. The consensus is for a 0.5% rebound from the previous 0.9% decline.

CHF

The Swiss ZEW economic expectations report printed another improvement, as the index rose from 16.3 to 24.9. For today, there are no reports due from Switzerland so the USD/CHF pair might be more sensitive to updates from Washington. The US government shutdown might end soon, now that the lawmakers have agreed on a deal to raise the debt limit.

JPY

The yen extended its slide to the major currencies as more progress has been made in the US budget debates. There were no reports released from Japan yesterday and none are due today, which suggests that the yen could keep moving to the tune of risk flows.

Commodity Currencies (AUD, NZD CAD)

The comdolls managed to hold steady against the US dollar, as risk appetite improved yesterday. Canadian manufacturing sales turned out weaker than expected at -0.2% versus the estimate at 0.3% and the previous 1.7% increase. No reports are due from Australia and New Zealand today but Canada will be gearing up to release its foreign securities purchases report, slated to show a small increase from 6.09 billion CAD to 7.12 billion CAD.

By Kate Curtis from Trader’s Way

129

I will waiting for this outlook thanks.

130

USD

The US dollar was a sore loser on Friday as it continued to sell off against its major counterparts. Risk appetite was still strong that day, after the US government ended its shutdown and avoided a default earlier in the week. As for data, there weren’t any released from the US economy last Friday. US existing home sales and crude oil inventories are up for release today. Existing home sales could dip from 5.41M to 5.38M while crude oil inventories are projected to fall from 6.8M to 3.4M.

EUR

The euro extended its gains against the US dollar on Friday as risk appetite remained in the markets until the end of the trading week. There were no reports released from the euro zone on Friday, as EUR/USD’s action was mostly a result of market sentiment. For today, German PPI is up for release and a 0.1% uptick in producer prices is expected.

GBP

The pound was able to reach the 1.6200 handle against the dollar on Friday as traders continued to take on more risk in their portfolios. There were no reports released from the UK then while earlier today, the Rightmove HPI printed better than expected data as the report showed a 2.8% jump in house prices. No other reports are due from the UK for the rest of the day.

CHF

The franc continued its winning ways on Friday as the USD/CHF pair came close to testing the .9000 major psychological level. There were no reports released from Switzerland as the move was mostly a result of an improvement in risk sentiment. For today, Switzerland’s economic schedule is still empty so USD/CHF might stay sensitive to sentiment for the rest of the day.

JPY

Yen pairs either edged higher or stayed range-bound on Friday, supported by the run in risk appetite. There were no reports released from Japan but the recent improvements in Chinese data were enough to spark confidence during the Asian trading session. Japan just printed a 1.09 trillion JPY trade deficit, slightly larger than the estimated 1.06 trillion JPY deficit, and is set to report its all industries activity index within the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to take advantage of risk appetite on Friday after China printed improvements in its economic data. GDP climbed from 7.5% to 7.8% for the third quarter of the year while industrial production came in line with consensus at 10.2%. Retail sales was slightly weaker than expected. Canada’s CPI was mostly in line with consensus as the core figure printed a 0.2% uptick and so did the headline figure. Canadian wholesale sales is up for release today and a 0.6% uptick is eyed.

By Kate Curtis from Trader’s Way

131

USD

The US dollar was stuck in consolidation against most of its counterparts but managed to end higher against the pound and the yen. Risk appetite was still up in yesterday’s trading but traders seemed a little more cautious as they unwound some of their dollar positions ahead of today’s NFP event. Before that though, the existing home sales report came in weaker than expected with a downward revision in the previous month’s figure. Stronger hiring is eyed for the month of September, as analysts forecast a 182K rise in employment which should keep the unemployment rate steady at 7.3%.

EUR

The euro managed to hold on to its recent levels against the dollar as the German PPI release came in better than expected at 0.3% versus the estimated 0.1% uptick. There are no reports due from the euro zone today so euro traders will focus on the U.S. non-farm payrolls release, which is expected to result in EUR/USD rallies if the actual figure disappoints.

GBP

The pound lost more ground to the dollar yesterday as there were hardly any reports to give the currency an additional boost. For today, the public sector net borrowing report is due and a smaller figure is expected, which would reflect smaller debt by the government. This should be positive for the pound but a bigger mover for pound pairs might be the NFP release which would affect overall market sentiment.

JPY

The yen continued its losing ways to its major counterparts as the Nikkei stock index chalked up almost 1% in gains. Risk appetite was still up during the Asian session, much to the disappointment of the lower-yielding yen. There are no major reports lined up from Japan today so yen trading could also be driven by the sentiment resulting from the NFP release in today’s New York session.

CHF

The franc simply lazed around the charts yesterday since there were no fresh catalysts from Switzerland. Not even the US existing home sales report was able to bust USD/CHF out of consolidation above the .9000 handle as traders are sitting on their hands ahead of the US NFP release.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground to the US dollar in yesterday’s trading as there were no further releases that fueled their rallies. The New Zealand dollar pulled back to the .8400 area while USD/CAD bounced from 1.0300. Canadian wholesale sales came in slightly below consensus at 0.5% versus the estimate at 0.6%. Canadian retail sales data is up for release today and weaker increases are expected compared to the previous month’s figures.

By Kate Curtis from Trader’s Way

132

USD

The US dollar lost a lot of ground thanks to the weaker than expected NFP reading of 148K for September. This marks the third consecutive month that the jobs report has missed expectations, although the jobless rate improved from 7.3% to 7.2%. A reading below 150K suggests that the Fed isn’t likely to taper at all for the rest of the year, which explains why the dollar lost its shine. Up ahead, we have US import prices and crude oil inventories data, which aren’t expected to have a huge impact on dollar price action.

EUR

The euro was able to take advantage of dollar weakness yesterday, as the pair surged past the 1.3700 handle and came close to testing 1.3800. There were no reports released from the euro zone on Tuesday and today has a few medium-tier reports on tap. These are the euro zone consumer confidence, Belgium NBB business climate, and German 30-year bond auction. Better than expected data could help the euro extend its gains while weak figures could trigger a quick retracement.

GBP

The pound staged a strong rally yesterday, lifted by stronger than expected public sector net borrowing data and weaker than expected NFP figures from the US. Public sector net borrowing was lower than expected at 9.4 billion GBP while the previous month’s figure enjoyed a downward revision, revealing that the UK’s finances are starting to improve. For today, BOE meeting minutes are up for release and hawkish remarks are likely to help the pound head further north.

CHF

The franc was able to strengthen against the US dollar yesterday, pushing USD/CHF significantly below the .9000 major psychological level. Swiss trade balance printed a higher than expected trade surplus and it also helped that US data was below expectations. For today, there are no reports due from Switzerland as the franc might stay stuck in consolidation or continue to take advantage of dollar weakness.

JPY

The yen lost a lot of ground to its major counterparts except for the US dollar, as risk appetite stayed in the markets yesterday. There were no reports released from Japan then and none are due today, which suggests that yen pairs might be sensitive to sentiment again.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to soar up the charts yesterday, as risk appetite allowed them to rally against the yen and weak US data pushed dollar pairs much higher. Data from Canada was mixed, with core retail sales coming in stronger than expected at 0.4% and headline retail sales falling short of consensus at 0.2%. Earlier today, Australia printed a strong CPI reading of 1.2% which was enough to boost the Aussie as traders predicted this would soon convince the RBA to hike rates. The BOC is set to make its interest rate decision in today’s US session and is likely to keep policy unchanged.

By Kate Curtis from Trader’s Way

133

USD

The U.S. dollar was able to take a breather from its recent selloff in yesterday’s trading, as it was boosted by risk aversion during the Asian session. Against the Japanese yen though, the U.S. dollar was stilal weaker as the lower-yielding yen proved to be the preferred safe-haven alternative. There were no major reports released from the U.S. during the New York session, but most dollar pairs were able to recover as risk appetite improved later on.

EUR

The euro dipped a bit lower against the dollar during the Tokyo session but bounced back in the U.S. session. EUR/JPY also made a quick recovery after dipping below the 134.00 mark, even though euro zone data was actually weaker than expected. Belgium printed a weaker than expected NBB business climate reading while overall euro zone consumer confidence made no improvement from the previous -15 reading. For today, German and French euro zone PMIs are up for release and stronger expansions are expected for their manufacturing and services sectors.

GBP

The pound let go of some of its recent gains to the dollar and yen but it bounced back immediately when the BOE meeting minutes turned out more hawkish than expected. Policymakers were unanimous in voting to keep interest rates and bond purchases unchanged, but what surprised market participants was their decision to upgrade growth forecasts. They also predicted that the labor situation would improve faster than initially estimated. UK CBI industrial order expectations data is up for release today and an improvement could echo the BOE’s upbeat outlook and push the pound higher.

JPY

The yen was a big winner in yesterday’s trading, as the lower-yielding currency was able to take advantage of risk aversion. News of China’s surging money market rates prompted concerns about liquidity and a potential growth downturn, which led traders to let go of their higher-yielding and riskier holdings. There were no reports released from Japan yesterday and there are none lined up for today so the yen might keep reacting to risk sentiment.

CHF

The franc extended its wins to the dollar, as the USD/CHF pair is close to testing 0.8900 support. There were no reports released from Switzerland but the risk off environment still boosted the franc, as it appeared to be the better safe-haven alternative compared to the U.S. dollar. There are still no reports due from Switzerland today so risk sentiment might be a major driver of price action once more.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up a lot of ground to the yen and the dollar as risk aversion dominated price action yesterday. The Australian dollar was barely lifted by the better than expected quarterly CPI reading of 1.2% but it seems to be drawing support from the stronger improvement in the Chinese HSBC flash manufacturing PMI report for October, which climbed from 50.2 to 50.9. Meanwhile, the Loonie lost traction when the BOC downgraded its forecast for this year until 2015, even though the central bank maintained monetary policy. New Zealand printed a smaller than expected trade deficit but the previous month’s figure suffered a downward revision.

By Kate Curtis from Trader’s Way

134

USD

The US dollar had a mixed performance yesterday, as it managed to extend its gains against the commodity currencies but was stuck in consolidation to the euro and the yen. USD/JPY is stalling above the 97.00 mark, as though waiting for a larger catalyst for a breakout in either direction. Yesterday’s set of reports printed weak results as the trade balance was better than expected but the flash manufacturing PMI and initial jobless claims were both below consensus. The trade deficit narrowed to 38.8 billion USD, reflecting an improvement in export activity. The flash manufacturing PMI slipped from 52.8 to 51.1 in the current month, which means that the industry expansion was slower in October. Meanwhile, jobless claims came in at 350K, slightly higher than the expected 343K reading. US durable goods orders data are up for release today and the core figure is expected to show a 0.6% uptick while the headline figure could print a 1.7% increase.

EUR

The euro was unable to make significant headway past the 1.3800 handle against the U.S. dollar, as most of the PMI figures from Germany and France came in below expectations. French flash manufacturing PMI even printed a contraction for the month, as the reading fell from 49.8 to 49.4 instead of improving to 50.3. German flash services PMI was weaker than expected at 52.3 versus the expected rise to 53.8 while the previous month’s figure was revised down to 53.7. For today, German Ifo business climate data is due and an improvement from 107.7 to 108.2 is eyed.

GBP

The pound was sold off against most of its counterparts yesterday, as the CBI industrial order expectations came in much weaker than expected. The report printed a surprisingly downbeat -4 reading versus the consensus of an improvement from 9 to 10. UK preliminary GDP for Q3 2013 is up for release today and a downside surprise might be in the cards, given the recent disappointment in PMI figures. A growth figure of 0.8% is expected for the period.

CHF

The lack of data prevented the franc from extending its gains against the US dollar yesterday, as USD/CHF was stuck above the .8900 major psychological level. There are still no reports due from Switzerland today, as US data could dictate whether the pair would break down or make a quick bounce. Watch out for the release of the US durable goods orders data during the New York session if you’re waiting for this pair to pick a direction.

JPY

The yen also had a mixed performance similar to the dollar yesterday, as USD/JPY was stuck in consolidation while comdolls gave up ground to the Japanese currency. There were no reports released from Japan then but earlier today, the CPI figures fell short of expectations. Tokyo printed a 0.3% uptick in core price levels, lower than the estimated 0.4% increase, while the national core CPI was at 0.7%.

Commodity Currencies (AUD, NZD, CAD)

Comdolls gave up more ground to the dollar and the yen as risk remained off yesterday. Better than expected Chinese flash manufacturing PMI was not enough to keep the Aussie and Kiwi supported, while the Loonie chalked up more losses because of the recent growth downgrades from the BOC. There are no reports due from the comdoll economies today so it should be all about risk sentiment driving price action.

By Kate Curtis from Trader’s Way

135

USD

The US dollar had a mixed performance against its major currency counterparts, as it consolidated against the euro and yen but gained ground against the commodity currencies. Risk was still off on Friday but the dollar was sold off because of bleak data from the US. Core durable goods orders printed a 0.1% decline while the headline figure showed a 3.7% rise. Meanwhile, the UoM consumer sentiment reading had a downward revision to 73.2, which shows that confidence was weaker than initially estimated. For today, pending home sales are up for release and a small rebound of 0.5% is expected to follow the previous 1.6% decline.

EUR

The euro ignored weaker than expected data from Germany on Friday as it managed to consolidate against the dollar and rebound against the yen. German Ifo business climate declined from 107.7 to 107.4 instead of posting an improvement, but this wasn’t much cause for concern as the index is still somewhere close to its recent highs. There are no reports due from the euro zone today so euro pairs might keep consolidating.

GBP

The pound lost ground to its counterparts on Friday even though the UK GDP for Q3 2013 came in line with consensus. The report printed 0.8% growth for the quarter while the previous quarter’s report showed an upward revision from 0.6% to 0.7%. It appears that traders were not convinced that the growth figures are showing enough upward momentum. For today, the CBI realized sales figure is due and a drop from 34 to 33 is projected. A weaker than expected figure might result to more losses for the pound.

CHF

The franc was unable to break below the .8900 major psychological level against the US dollar on Friday because there were no reports released from Switzerland then. Not even mixed US reports were able to rein in more franc bulls at that time. For today, there are no reports due from Switzerland so we might be in for another round of sideways movement for franc pairs.

JPY

Yen pairs gapped up over the weekend as Asian markets opened higher. Over the weekend, China reported a strong surge in company operating profits for industrial firms, which led traders to believe that the recent rise in market rates might not weigh on growth so much. Also, Japanese PM Abe recently had an interview wherein he spoke of Japan challenging China’s recent reforms. No reports are due from Japan today but the rebound in sentiment might keep yen pairs supported.

Commodity Currencies (AUD, NZD, CAD)

Comdolls were no match to the dollar’s strength on Friday as risk sentiment was still weak. NZD/USD suffered a sharper selloff on the heels of Wheeler’s comments saying that the Kiwi was already overvalued. The Loonie was also weighed down by the recent shift in stance by the BOC, as the central bank let go of its rate hike bias. There are no reports due from the comdolls today so it could be market sentiment driving these pairs again.

By Kate Curtis from Trader’s Way

136

USD

The US dollar made a feeble recovery against its major counterparts on Monday, as the safe-haven currency gained against the British pound and the Swiss franc. It also extended its gains against the commodity currencies as risk remained off in the financial markets. Data from the US economy was much weaker than expected, as the pending home sales report printed a 5.6% decline versus the estimated 0.5% rebound. Medium-tier figures, such as capacity utilization and industrial production, printed better than expected results. For today, US core retail sales, PPI, and CB consumer confidence are up for release. US retail sales are projected to be up by 0.2% for the headline figure and 0.4% for the core figure, while consumer confidence is likely to decline from 79.7 to 75.2.

EUR

The euro stayed in consolidation against the US dollar and lost a bit of ground to the yen, as there were no major reports released from the euro zone yesterday. Germany’s GfK consumer climate index is the only release lined up from the euro zone today so it could have a strong impact on euro pairs. The reading is projected to climb from 7.1 to 7.3, reflecting increased optimism for the euro zone’s largest economy. A weaker than expected figure, on the other hand, could lead to a euro selloff as it would imply weaker confidence.

GBP

The pound gave up a lot of ground to its major counterparts in yesterday’s trading, pushing GBP/USD down to the 1.6100 area and GBP/JPY down to 157.00. Data from the UK was weaker than expected as the CBI realized sales figure plummeted from 34 to 2 instead of just dipping to 33. Also, MPC member Dale gave a testimony and remarked that the option of further easing is still on the table for the BOE. This was enough to trigger a pound selloff as traders were reminded that the UK has printed weak data recently. UK net lending to individuals data is up for release today along with the mortgage approvals report.

CHF

The franc retreated to the US dollar in yesterday’s trading since there just wasn’t enough buying power to sustain a break below USD/CHF’s .8900 level. There were no reports released from Switzerland yesterday and there are none due today, which suggests that the pair might keep pulling back depending on how US data turn out.

JPY

The yen managed to close most of the weekend gaps against its counterparts, as Japan printed strong data. Household spending and retail sales were both better than expected while the jobless rate was as expected at 4.0%. Household spending increased by 3.7% from a decline of 1.6% while retail sales grew 3.1% instead of the estimated 1.9% rise. No other reports are due from Japan today so these recent upbeat figures might be enough to keep the Japanese currency supported.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to give way to the dollar in yesterday’s trading, as sentiment for these currencies was mostly bearish. AUD/USD slid to the .9500 area while NZD/USD edged lower to .8300. There were no reports released from Australia and New Zealand yesterday and there are none due today. As for Canada, BOC Governor Poloz is set to give a speech that might clarify the BOC’s change in monetary policy bias. Also due from Canada are medium-tier inflation reports.

By Kate Curtis from Trader’s Way

137

USD

The US dollar was able to advance against its major counterparts in yesterday’s trading as risk aversion kept the lower-yielding currency afloat. Data from the US was mostly weaker than expected, as the headline retail sales figure showed a 0.1% decline while the core report showed a 0.4% increase. CB consumer confidence chalked up a very sharp drop in October because of the government shutdown, as the reading fell from 80.2 to 71.2. The FOMC is set to announce its monetary policy decision today and no changes are expected, as the recent downturn in the economy isn’t likely to convince the Fed to taper. Also due today is the ADP non-farm employment change which could elicit a similar reaction to the NFP release.

EUR

The euro finally broke out of its consolidation to the dollar yesterday but, unfortunately for the shared currency, the breakout was to the downside. There were no major reports released from the euro zone yesterday so the euro was weighed down by risk aversion. For today, a bunch of medium-tier reports from individual euro zone economies are up for release. Germany is set to report its unemployment change figure and possibly report a small increase in joblessness of 1K versus the previous 25K reading. Meanwhile, Spain is expected to exit its recession with 0.1% growth for the third quarter of the year.

GBP

The pound continued to slide lower against the US dollar in yesterday’s trading as risk-taking was kept at bay. Data from the UK was actually stronger than expected, as both net lending to individuals and mortgage approvals printed higher than estimated results, but these weren’t enough to provide support for the pound. There are no reports due from the UK today so it could be mostly market sentiment that would drive pound price action.

CHF

The franc was unable to make any headway past the US dollar in yesterday’s trading, as USD/CHF pulled up to the .9000 major psychological level. There were no reports released from Switzerland yesterday, which explains why the franc was unable to put up a good fight. For today, the UBS consumption indicator and KOF economic barometer are up for release and improvements could be enough to push USD/CHF back in selloff mode.

JPY

The yen edged a little higher against its rivals yesterday when risk aversion provided support for the lower-yielding currency. At the same time, Japan printed better than expected household spending and retail sales figures. Earlier today though, industrial production missed the consensus of a 1.8% increase and posted a mere 1.5% rise. The previous figure was also revised down to show a 0.9% decline. No other reports are due from Japan today so the yen might be sensitive to risk flows once more.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were once again victim of risk aversion, as they extended their losing streak to the dollar. However, the Loonie’s losses were a little more subdued even though medium-tier inflation reports from Canada were weak. Australia reported a strong 6.4% increase in HIA new home sales in today’s Asian session while the RBNZ is gearing up to make its interest rate decision in the next Asian session. Pricing in of expectations for downbeat remarks could weigh on the Kiwi for today though.

By Kate Curtis from Trader’s Way

138

USD

The US dollar staged a surprise rally after the FOMC interest rate decision, as Chairman Bernanke sounded less dovish with his economic assessment and outlook. In fact, the Fed head made no mention of any delays in the taper because of the recent government shutdown or downturn in hiring. This was enough for some traders to start pricing in the possibility of a December taper should economic conditions improve in the coming weeks. As for data, the ADP non-farm employment change was weaker than expected at 130K versus the 151K estimate. For today, US initial jobless claims and Chicago PMI are up for release. Jobless claims are projected to show a 341K figure while the Chicago PMI could print a drop from 55.7 to 55.1.

EUR

The euro traded lower against the US dollar after the FOMC interest rate statement, despite the recent improvements in the euro zone. Germany’s unemployment change figure came in close to consensus with a mere 2K rise in joblessness while Spain confirmed that it was out of a recession with its 0.1% growth figure. German retail sales and GfK consumer climate data are up for release today, along with French consumer spending and overall euro zone jobs data. Small improvements are eyed for Germany’s figures, which might be enough to keep the euro supported.

GBP

The pound edged lower to test the 1.6000 major psychological level against the US dollar in yesterday’s trading, despite the lack of data from the UK. Earlier today, GfK consumer confidence declined from -10 to -11 instead of improving to -8. Only the Nationwide HPI is left on the UK’s economic schedule for today and a 0.7% increase in house prices is expected. This isn’t a major economic report so it’s likely that GBP/USD will be stuck in its current levels unless there’s a major change in market sentiment.

CHF

The franc was able to gain against the US dollar when Switzerland printed a better than expected KOF economic barometer reading, but these gains were wiped out when the FOMC statement turned out less dovish than expected. The KOF figure jumped from 1.54 to 1.72, outpacing the consensus at 1.56. There are no other reports due from Switzerland today so the franc might have to struggle to stay below the .9000 handle if dollar strength is still in play today.

JPY

The yen pairs were stuck in consolidation for the most part as traders awaited today’s BOJ interest rate decision. Data from Japan was weaker than expected yesterday, as the industrial production showed a 1.5% increase instead of the estimated 1.8% growth. Earlier today, the manufacturing PMI release showed an improvement from 52.5 to 54.2.

Commodity Currencies (AUD, NZD, CAD)

The comdolls chalked up another day of losses to the dollar but AUD/USD managed on hold on above .9500 while NZD/USD was able to stay above .8200. The RBNZ decided to keep monetary policy unchanged for now, as inflationary concerns were keeping policymakers from cutting interest rates. Earlier today, Australia reported a strong 14.4% jump in building approvals and a 6.1% increase in import prices. Later on, Canada will print its monthly GDP and possibly show a 0.2% growth figure.

By Kate Curtis from Trader’s Way

139

USD

The US dollar had a mixed trading day, as it gained ground against the euro and franc but gave up some gains to the Canadian dollar and Japanese yen. Against the Kiwi and pound, the Greenback struggled to consolidate. Data from the US was mostly better than expected, as the initial jobless claims report showed a 340K figure while the Chicago PMI jumped from 55.7 to 65.9. However, analysts are uncertain whether this report is accurate or if huge downward revisions will be made later on. For today, the US ISM manufacturing PMI is up for release and decline from 56.2 to 55.3.

EUR

The euro had a massive selloff against all of its counterparts in yesterday’s trading, pushing EUR/USD and EUR/JPY lower by nearly 200 pips. Euro zone reports were all weaker than expected yesterday, with German retail sales printing a surprise 0.4% decline and GfK consumer climate dipping from 7.1 to 7.0. French consumer spending also missed expectations while Italy’s jobless rate posted a higher than expected reading. Overall euro zone unemployment also increased recently. For today, euro zone banks are on a holiday so the low liquidity environment could spark more volatile moves.

GBP

The British pound struggled to hold on to its current levels, as data from the UK was better than expected. Nationwide reported a 1.0% increase in house price levels, which is good for overall inflation. UK manufacturing PMI is on tap for today and a small decline from 56.7 to 56.3 is expected. A stronger than expected reading though could trigger a relief rally for the pound.

CHF

The franc was unable to recover against the dollar in yesterday’s trading so it packed up its gains against the euro instead. There were no releases from Switzerland then. Today has the SVME PMI on tap and analysts are expecting to see an uptick from 55.3 to 55.4, reflecting a stronger expansion in the Swiss manufacturing sector.

JPY

The yen managed to edge higher against most of its major counterparts, pocketing the largest gains against the euro. The BOJ made no changes to monetary policy as expected, but they did upgrade their growth forecast for next year from 1.3% to 1.5%. For 2015, they kept their growth estimate unchanged at 1.5%. Inflation forecasts for the next two years were also maintained. There are no reports due from Japan today so risk sentiment might drive yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar and New Zealand dollar edged a bit lower to the dollar while the Loonie was able to recover. Data from Canada was strong, as the monthly GDP reading showed a 0.3% expansion and took the annual reading to a 2.0% increase. Chinese official manufacturing PMI was in line with consensus for October, as the figure improved from 51.1 to 51.4. No other reports are due from the comdoll economies today so risk sentiment and potential profit-taking could play a central role in price action.

By Kate Curtis from Trader’s Way

140

USD

The US dollar was able to get a boost from stronger than expected ISM manufacturing PMI for October, as the reading climbed from 56.2 to 56.4 instead of dipping to the consensus at 55.3. There are no reports due from the US today, as sentiment could drive price action. If risk appetite remains low, the US dollar could stay supported against its counterparts for the rest of the New York session.

EUR

The euro was under heavy selling pressure at the end of last week, as ECB officials have hinted that a rate cut is in the cards. Euro zone banks were on a holiday last Friday but the selloff still continued and is likely to carry on for the rest of today’s trading session. For today, Spanish and Italian PMIs are up for release along with the manufacturing PMI for the euro zone region. Weaker than expected readings could lead the euro to suffer a deeper selloff in the London session.

GBP

The pound gave way to dollar strength on Friday, as the UK manufacturing PMI dipped from 56.3 to 56.0 instead of holding steady for the month of October. The construction PMI is due today and it is expected to stay at 58.9 but another downside surprise might lead to pound weakness again.

CHF

USD/CHF climbed higher on Friday when Switzerland’s SVME PMI came in weaker than expected. The actual reading fell from 55.3 to 54.2 instead of improving to 55.4. There are no reports due from Switzerland today so it could be all about risk sentiment driving USD/CHF across the charts. The pair is already approaching a key resistance level and any change in sentiment could lead to a reversal in that area.

JPY

The yen continued to gain against its counterparts since the lower-yielding currency was able to take advantage of strong Japanese data and the low-risk market environment. There were no reports released from Japan last Friday and there are none due today as Japanese banks are on holiday. With that, expect higher volatility among yen pairs and potential swings if risk appetite changes.

Commodity Currencies (AUD, NZD, CAD)

The comdolls still chalked up some losses on Friday even though Australia reported a rise in quarterly producer prices and Chinese official manufacturing PMI came in line with expectations. Over the weekend, the non-manufacturing PMI of China showed an improvement and this might keep the Australian dollar supported for the rest of the day. Australia also printed a better than expected retail sales increase of 0.8% versus the estimated 0.5% uptick. There are no reports due from Canada or New Zealand for the rest of the trading day so risk sentiment could be crucial in determining where these currencies are headed.

By Kate Curtis from Trader’s Way

141

USD

The US dollar was off to a slow start on Monday and was unable to sustain its rallies from the previous week. Data from the US was a bit weak, as the September factory orders report printed a lower than expected 1.7% increase while the August data showed a 0.1% decline. Around the same time, FOMC members Powell and Rosengren expressed inclination for keeping bond purchases unchanged for the meantime, which suggests that a taper in December is not very likely. US ISM non-manufacturing PMI is up for release today and a dip from 54.4 to 54.2 is expected, but an upside surprise might lead to more gains for the dollar.

EUR

The euro managed to bounce off the recent lows, as euro zone reported an improvement in Sentix investor confidence. The figure climbed from 6.1 to 9.3, surpassing the consensus at 6.3. Spanish manufacturing PMI came in line with consensus at 50.9 while Italy’s PMI fell short at 50.7. Spanish employment change data is up for release today and an increase from 25.6K to 31.3K is expected. Also due today are the EU economic forecasts and any downgrades could spark a deeper selloff for euro pairs.

GBP

The pound was able to hold steady above the 1.5900 major psychological support yesterday when the UK construction PMI came in better than expected. The reading climbed from 58.9 to 59.4 in October, reflecting stronger expansion in the manufacturing sector. The services PMI is up for release today and the index is expected to rise from 60.3 to 60.4, although an upside surprise could also be possible and help the pound extend its gains.

CHF

The franc was stuck in consolidation to the US dollar yesterday but it did manage to score a few gains. There were no reports released from Switzerland then but today could be a different story since the CPI figure is due. The report could show a 0.1% uptick in price levels, a bit weaker compared to the previous 0.3% increase.

JPY

The Japanese yen was able to regain ground against most of its counterparts in today’s trading session after a bit of consolidation yesterday. There were no reports released from Japan then. Today, traders are waiting to hear from BOJ Governor Kuroda and his speech might provide additional volatility for yen pairs towards the end of the Asian session.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to make much headway yesterday, as USD/CAD bounced off the 1.0400 handle while NZD/USD moved sideways around .8250. Data from Australia was mixed, as the HPI disappointed while the retail sales report showed a better than expected 0.8% uptick. The RBA is set to make its monetary policy decision today and possibly highlight the recent improvements in China and Australia. New Zealand jobs data is due in the next Asian session so NZD/USD might see some breakouts then.

By Kate Curtis from Trader’s Way