Daily Market Outlook by Kate Curtis from Trader's Way

Commercial Content Analysts
142

USD

After a bit of a selloff in the earlier trading sessions, the Greenback regained ground in the New York session when the US economy printed a better than expected ISM non-manufacturing PMI report. The index climbed from 54.4 to 55.4 in October instead of dipping to the estimate at 54.2. This shows that the services sector had a stronger expansion for the month, which spells good prospects for growth and employment. For today, only medium-tier data such as the Challenger job cuts and CB leading index are up for release, both of which are not expected to have significant impact on the dollar’s movement.

EUR

The euro made a bit of headway to the dollar in the Asian and London sessions but gave up its gains when the US session rolled along. Spain’s unemployment change report was worse than expected, as the country posted a 87K increase in joblessness versus the estimate of a 31K rise. Aside from that, the European Commission downgraded their growth and employment forecasts for the entire region, prompting many to speculate that the central bank could boost liquidity in their upcoming rate decision. Spanish and Italian services PMIs are due today, along with German factory orders and euro zone retail sales. Another round of weak data could spark more rate cut or LTRO expectations, which could lead to a deeper euro selloff.

GBP

The pound was able to stay above the 1.5950 support level against the dollar when the UK printed a better than expected services PMI reading. The report showed an improvement from 60.3 to 62.5, outpacing the consensus at 60.4. Manufacturing and industrial production are due today and these should determine whether the pound can keep up its rallies or not.

CHF

The franc gave up most of its recent gains to the dollar in yesterday’s trading as Switzerland’s CPI came in weaker than expected. The report printed a 0.1% drop in consumer price levels instead of the projected 0.1% uptick. There are no reports due from Switzerland today so it could be all about risk sentiment and US data driving USD/CHF.

JPY

The yen had a mixed performance yesterday, as it gained against the euro but consolidated against the pound. There were no major reports released from Japan and the freshly released BOJ meeting minutes contained no surprises. Japan is set to hold its 10-year bond auction in a few hours and this might result to volatility among yen pairs if bond yields spike.

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained ground yesterday on news that China was pumping liquidity again. Aside from that, data from New Zealand turned out better than expected, as the economy showed a 1.2% increase in employment for the third quarter of the year. Australia released a smaller than expected trade deficit of 0.28 billion AUD versus the estimated 0.51 billion AUD. Later on, Canada will print its Ivey PMI and possibly show an improvement from 51.9 to 54.7.

By Kate Curtis from Trader’s Way

143

USD

The US dollar was mostly stuck in consolidation against its major currency counterparts since there were no top-tier reports released from the US economy. Challenger job cuts data showed a 4.2% decline for October, better than the previous 19.1% increase. Advance GDP and initial jobless claims data are up for release today, as the growth figure could come in at 2.0% while the first-time jobless claimants could reach 336K. Also note that FOMC members Dudley and Stein are set to testify today and possibly cause volatility among dollar pairs should they mention their views on the Fed taper.

EUR

The euro was able to hold on to its current levels against the dollar and yen, as euro zone data came in mixed. Spain’s non-manufacturing PMI was better than expected at 49.6 versus the estimated 48.1 reading and also better than the previous 49.0 figure. However, Italy’s non-manufacturing PMI fell short of consensus at 50.5 versus the estimate at 51.6 and the previous 52.7 reading. Euro zone retail sales disappointed with a 0.6% decline while German factory orders printed an impressive 3.3% jump. The ECB is set to make its interest rate decision today and some are expecting to hear further easing from policymakers. The Spanish and Italian bond auctions are also scheduled today, along with the release of German industrial production data.

GBP

The pound was able to hold on to its gains yesterday, as the currency was supported by stronger than expected services PMI released the previous day and the expected 1.2% increase in manufacturing production. The industrial production component printed a better than expected 0.9% increase. For today, the BOE interest rate decision is expected to spark volatility among pound pairs, depending on how Carney assesses the economic situation.

CHF

The Swiss franc moved sideways to the US dollar yesterday, thanks to the lack of data from both US and Switzerland. Swiss foreign currency reserves data is up for release today and might push USD/CHF in a general direction should the actual figure come in better or worse than expected. Other than that, there are no reports due from Switzerland so USD/CHF might be more sensitive to US data.

JPY

The Japanese yen lost ground to its major counterparts in the earlier trading sessions when risk appetite improved in Asian trading. There were no reports released from Japan, as the yen simply reacted to the Nikkei and other Asian indices closing higher for the day. There are still no reports due from Japan today so yen pairs could be sensitive to risk sentiment yet again.

Commodity Currencies (AUD, CAD, NZD)

The Australian dollar gave up its recent gains to its counterparts when Australia printed a very bleak employment change report. The reading showed a 1.1K increase versus the estimated 10.3K rise while the previous month’s figure was revised down from 9.1K to 3.3K. The jobless rate ticked higher from 5.6% to 5.7%. In Canada, the Ivey PMI came in better than expected as it climbed from 51.9 to 62.8, stronger than the estimated increase to 54.7. There are no reports due from New Zealand but the Kiwi might stay supported because of the gains in hiring in the country. No other reports are due from Canada and Australia as well, so their currencies could react to risk appetite.

By Kate Curtis from Trader’s Way

144

USD

The US dollar had a topsy-turvy trading day, as it gained ground when the US advanced GDP reading came in better than expected at 2.8% versus the estimate at 2.0% and the previous 2.5% reading. However, traders got hold of the underlying figures and realized that the economy wasn’t as strong as it appeared. As it turns out, much of the GDP increase was simply a result of an increase in stockpiles, which is likely to drop later on. Due for today is the non-farm payrolls figure, which is slated to show a weaker reading for October because of the recent government shutdown.

EUR

The euro got blown out by the surprise rate cut by the ECB from 0.50% to 0.25%. This pushed EUR/USD to the 1.3300 handle before it rebounded to 1.3400 again when traders booked profits. Draghi said that the euro zone is likely to undergo a longer period of low inflation while economic risks remain to the downside. He also reiterated that the ECB has enough easing measures left to implement if necessary. As for exchange rates, he said that there has been no mention of the euro in their latest meeting. Medium-tier reports, such as German trade balance and French consumer spending, are due today.

GBP

The pound was able to stay afloat when the BOE decided to keep monetary policy unchanged. In fact, pound pairs barely had any reaction to this expected result, as traders would rather wait for the minutes of their monetary policy meeting later on. Although GBP/USD declined sharply when the US showed a strong GDP reading, the pair was able to make a quick recovery. The UK is set to print its trade balance today but this isn’t likely to have a strong effect on GBP/USD compared to the NFP.

CHF

The franc lost ground to the dollar when the ECB decided to cut interest rates but resistance at the .9200 levels held for USD/CHF and the pair quickly retreated when the underlying figures of the US GDP weren’t so strong. Swiss SECO consumer climate was weaker than expected as the reading came in at -5, short of the -2 consensus. Swiss retail sales are due today and the annual figure is expected to improve from 2.4% to 2.6%.

JPY

The yen had a volatile trading day, as USD/JPY spiked above 99.00 on the heels of strong US GDP but fell back below 98.00 right away. Against the euro, the yen was able to post a lot of gains when the ECB cut rates. There were no reports released from Japan yesterday and none are due today so yen pairs could stay sensitive to country-specific data and risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up some ground to the dollar, which was boosted by a strong US GDP figure. However, these losses were quickly erased and the comdolls managed to hold on to their previous levels. Earlier today, a downbeat RBA statement weighed on the Australian dollar as policymakers decided to downgrade their growth forecasts for 2014. Up ahead, Canada is set to print its employment change report and jobless rate, as weaker than expected readings could push USD/CAD up the charts.

By Kate Curtis from Trader’s Way

145

USD

The US dollar was able to pack in plenty of gains on Friday when the October NFP release came in much better than expected. The actual figure showed a 204,000 rise in net hiring instead of falling to 120,000 because of the government shutdown. Aside from that, the previous month’s figure was revised up to 163,000, showing a good trend in hiring. Traders took this as a sign that the Fed could start reducing stimulus before the year ends, which provided support for the dollar. This positive sentiment could carry on today as US banks are on holiday because of Veterans Day.

EUR

The euro gave up ground to the dollar on Friday again when the US non-farm payrolls release turned out better than expected. Data from the euro zone was mostly weaker than expected then, as French industrial production and trade balance both missed expectations. Only the German trade balance turned out stronger than expected but it wasn’t enough to keep the euro afloat. For today, there are no reports from the region as banks are on holiday.

GBP

The pound gave way to dollar strength on Friday as data from the UK was weaker than expected. The trade balance report showed a wider deficit of 9.6 billion GBP instead of the estimated drop from 9.6 billion GBP to 9.1 billion GBP. There are no reports due from the UK today, which suggests that pound pairs might keep moving sideways or resume their previous selloff.

CHF

The franc was no match to dollar strength last week, pushing USD/CHF way past the .9200 resistance level. Swiss retail sales turned out to be a huge disappointment with a mere 1.0% increase, much lower than the estimated 2.6% figure. Analysts were expecting to see a small improvement from the previous month’s 2.4% reading. There are no reports due from Switzerland today so USD/CHF might keep heading higher on broad dollar strength.

JPY

USD/JPY finally showed signs of breaking out form the long-term consolidation pattern as the US showed a strong jobs figure. There were no reports released from Japan then, leaving the yen at the mercy of market sentiment. For today, Japan released a weaker than expected current account deficit of 0.13 trillion JPY versus the estimated at 0.10 trillion JPY. No other reports are due from Japan for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls caved to the dollar on Friday, although the Loonie did enjoy some resiliency thanks to better than expected Canadian jobs data. The employment change figure for Canada was up by 13.2K versus the consensus of a 12.7K rise while the jobless rate improved to 6.9%. Over the weekend, Chinese data came in mostly below consensus and weighed on the Australian dollar. CPI was at 3.2%, lower than the 3.3% estimate, while PPI printed a larger than expected 1.5% decline. There are no reports due from the comdoll economies today as the currencies could consolidate or be sensitive to risk sentiment.

By Kate Curtis from Trader’s Way

146

USD

Despite the thinner trading conditions during the US holiday, the dollar was still able to stay supported from last week’s strong NFP release. EUR/USD retraced to the 1.3400 handle and consolidated there while USD/JPY pushed for more gains. There’s still not much in the way of US economic data for today so it could be all about consolidation once again, unless talks of a December taper push the dollar much higher.

EUR

The euro is stuck around the 1.3400 handle for now, as traders await for more direction from euro zone data. Unfortunately, only a couple of medium-tier data from Germany is due and these aren’t likely to push the euro in a general direction. Be mindful of risk sentiment and additional updates from the euro region when trading euro pairs today.

GBP

The pound is still putting up a good fight against the US dollar for now, as it struggles to stay above the 1.5950 mark. UK CPI figures are up for release later today and weaker inflation of 2.5% versus the previous 2.7% is eyed. Other inflation reports are also due, which might provide clues on future inflation and potential monetary policy adjustments.

CHF

The Swiss franc was able to recover some of its losses to the dollar yesterday but it seems that more weakness is in the cards for today. The pair is still holding above the .9200 major psychological level. There are no reports due from Switzerland today so it could be all about risk sentiment driving USD/CHF today.

JPY

The yen gave up some ground to its counterparts today when data from Japan was weaker than expected. The tertiary industry index showed a drop of 0.2% versus the projected 0.2% uptick while consumer confidence fell to 41.2, reflecting lower optimism. The Nikkei also closed higher for the day, which suggests that the positively correlated USD/JPY could go for more gains.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were weaker in Asian trading today as China showed signs of bank tightening. In addition, the higher-yielding currencies saw limited buying potential as many worried that a Fed taper could undo most of the progress made in terms of export demand. Australian business confidence posted a decline from 12 to 5, lending further weakness to Aussie pairs.

By Kate Curtis from Trader’s Way

147

USD

The US dollar had a mixed performance in yesterday’s trading as it lost a bit of ground to the euro but made headway against the pound and the yen. There were no major reports released from the US economy then but the return of traders from their Veterans’ Day holiday was enough to bring strong moves back in the charts. Only the 10-year bond auction and Federal budget release are scheduled from the U.S. today so dollar pairs could continue to react to currency-specific events.

EUR

The euro was able to make headway against the dollar and the yen in yesterday’s trading, despite the recent ECB interest rate cut. Optimistic estimates for the upcoming GDP releases were enough to provide support for the shared currency, as there were no major reports released yesterday. For today, euro zone industrial production data is due and a 0.2% decline is expected.

GBP

The pound gave up a lot of ground to its major counterparts in yesterday’s trading when the UK CPI figure came in much weaker than expected. Analysts projected a decline from 2.7% to 2.5% but the actual figure landed at 2.2%, indicating that the BOE could still have room to ease if needed. Claimant count change data is due today and a 33.2K decline in the number of those claiming jobless benefits is expected. The jobless rate is estimated to improve from 7.7% to 7.6%, which might provide support for the pound.

CHF

The franc managed to put up a decent fight against the dollar, keeping USD/CHF still below the .9200 major psychological resistance. There were no reports released from Switzerland yesterday and there are none due today, which suggests that USD/CHF might hover around the .9200 handle until the next big catalyst comes along.

JPY

The yen gave up most of its recent gains to its major counterparts yesterday when the Nikkei stock index closed positive. Data from Japan was also weaker than expected, with consumer confidence declining and the tertiary industry activity showing a 0.2% drop. For today, core machinery orders printed a weaker than expected figure of -2.1% versus the estimate of a 1.8% drop, which might keep weighing on the yen for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls lost ground yesterday even though there wasn’t much in terms of economic data. Updates from China’s 3rd Plenum seemed to disappoint traders, as the government focused on land reforms and social security changes instead of the aggressive plans to boost economic growth. Australia’s wage price index came in weaker than expected today and this might keep weighing the Aussie down. Later on, New Zealand will print its quarterly retail sales figures and possibly show weaker spending.

By Kate Curtis from Trader’s Way

148

USD

The US dollar was wiped out yesterday when the prepared text of Janet Yellen’s speech was released. The transcript revealed what many were expecting, that Yellen would likely keep stimulus in place until the economy is able to show a significant recovery. In particular, she noted that the improvement in labor and inflation is still far from reaching its potential. She is set to give this testimony in front of the Senate Banking Committee today and she will be interviewed there as well. Her responses to economic questions and her plans for monetary policy could determine how the dollar will trade today.

EUR

The euro recovered to the dollar despite the downbeat remarks from several ECB officials. Some have noted the slow progress in the economy and the central bank’s openness to negative deposit rates, driving the shared currency lower in the London session. However, dollar weakness was the main theme for the US session, allowing EUR/USD to recover above 1.3400. Euro zone GDP figures from the region’s largest economies are up for release today and stronger than expected results might keep the euro afloat.

GBP

The pound got a strong boost from better than expected jobs data, as the claimant count change printed a 41.7K decline. The jobless rate improved from 7.7% to 7.6%, reflecting a continuous rebound in hiring for the UK economy. The BOE inflation report also provided support for the pound when the central bank policymakers predicted that the UK will reach its employment targets earlier than initially projected. For today, UK retail sales are up for release and a flat figure is projected to follow the previous 0.6% uptick.

CHF

The franc regained ground against the dollar and fell deeper below the .9200 handle when the US released the transcript of Yellen’s upcoming speech. There were no reports released from Switzerland then, as USD/CHF’s move was mostly a result of dollar weakness. Swiss PPI is up for release and a 0.3% uptick in producer prices is eyed.

JPY

The yen continued to lose to its major counterparts in yesterday’s trading, as the Nikkei stock index posted gains. Data released from Japan earlier today came in better than expected, with the preliminary GDP reading showing a 0.5% uptick. The revised industrial production report is due today but this isn’t likely to cause waves among yen pairs, as their behavior could hinge on the performance of Asian markets again.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness in yesterday’s trading, as AUD/USD, USD/CAD, and NZD/USD bounced off key levels. New Zealand retail sales was weaker than expected as the headline figure showed a 0.3% uptick instead of the 0.9% estimated increase while the core figure showed a 0.1% decline. Canadian trade balance is up for release later today and a smaller deficit is expected.

By Kate Curtis from Trader’s Way

149

USD

The US dollar’s reaction to Yellen’s confirmation speech was already priced in, as the text of the testimony was released a day ahead. Because of that, there were no wild moves among dollar pairs during the actual event, although it did see a quick selloff when Yellen mentioned that there are several risks in withdrawing stimulus too soon. Data from the US echoed Yellen’s downbeat assessment, as the initial jobless claims and trade balance both came in below expectations. For today, the Empire State manufacturing index, import prices, industrial production and capacity utilization rate are up for release. These medium-tier figures aren’t expected to trigger a sharp reaction from the dollar but it could be in for more weakness if all the figures come in weak.

EUR

The euro struggled to hold ground against the dollar when euro zone GDP came in mixed. Germany’s growth was as expected at 0.3%, weaker compared to the previous 0.7% increase, while France showed a contraction of 0.1% instead of the estimated 0.1% growth. Overall, the region’s GDP stood at 0.1%, weaker than the estimate at 0.2% and the previous 0.3% growth. Up ahead, euro zone CPI are up for release and more weakness could spark speculation of further easing from the central bank.

GBP

Despite weaker than expected UK retail sales, the pound managed to stay resilient to the dollar and the yen. Consumer spending ticked down by 0.7% in October instead of staying flat. There are no reports from the UK today so it will be interesting to see whether the pound can keep holding on to its recent gains.

CHF

The franc was moving sideways in yesterday’s trading, as Yellen’s speech didn’t spark much of a ruckus in the markets. Data from Switerland was weaker than expected as producer prices printed a 0.4% decline instead of the estimated 0.3% increase. There are no reports due from Switzerland today so there’s a good chance that USD/CHF might keep consolidating.

JPY

The yen lost a lot of gains to its counterparts as the Nikkei stock index kept surging. For today, the Nikkei opened above 15,000 for the first time in almost half a year, lending more upside for yen pairs. USD/JPY already reached the 100.00 mark and it appears that there’s more upward momentum to the next resistance levels. Japanese preliminary GDP came in stronger than expected at 0.5% and this might keep lifting yen pairs since there are no other reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up a few gains to the dollar but managed to score wins against the Japanese yen. There wasn’t much data from these economies recently, as medium-tier data from Canada barely resulted to pronounced gains or losses for the Loonie. Only Canadian manufacturing sales is left on deck for today and analysts foresee a 0.5% rebound from the previous 0.2% decline. Stronger than expected results might keep the Loonie afloat.

By Kate Curtis from Trader’s Way

150

USD

The US dollar weakened against most of its counterparts on Friday, as data from the US turned out below expectations. The Empire State manufacturing index printed a surprise negative figure, as it slipped to -2.2 instead of rising to the estimate at 5.2. Industrial production, capacity utilization, and import prices also came in the red. For today, only medium-tier data such as foreign securities purchases and a couple of speeches from FOMC officials are lined up. Expect quiet trading for most dollar pairs unless we hear of surprising comments from Dudley and Rosengren.

EUR

The euro was able to advance against the Greenback and the yen on Friday, thanks to an improvement in market sentiment and overall lack in demand for the dollar and the yen. Data from the euro zone came in line with consensus, as the CPI figure showed a 0.7% increase while the core version of the report printed a 0.8% uptick. For today, there are no major reports from the euro zone so EUR/USD and EUR/JPY might see quiet trading ahead.

GBP

The pound gapped up over the weekend, following Friday’s strong rally against the dollar and the yen. There were no reports released from the UK economy then but the previous days’ worth of data was enough to keep the pound supported against most of its counterparts. For today, the UK just reported a 2.4% decline in house prices for November, enough to remove most of the 2.6% gains seen last October. However, the pound just made a brief dip after the release and might still be on its way up north should sentiment for the UK remain positive.

CHF

There were no reports released from Switzerland last Friday, yet the franc still managed to hold its ground against the US dollar. There are still no reports lined up from Switzerland today though so USD/CHF might be in for more sideways movement below the .9200 major psychological level unless there are economic surprises from the US economy.

JPY

The yen gave up more ground to most of its counterparts on Friday, as the Nikkei climbed to record highs and dwindled demand for the lower-yielding yen. The Japanese equity market continued to take advantage of the improvement in risk sentiment and anticipation of further stimulus from the BOJ. There are no reports due from Japan today so the yen pairs might keep reacting to Nikkei price behavior.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were finally able to recover against the US dollar on Friday, thanks to the weak data from the US economy. Canadian manufacturing sales came in line with consensus at 0.6%, allowing the Loonie to hold its ground. Only the Canadian foreign securities purchases is due from these economies today and this isn’t likely to have a material impact on price action. Risk sentiment could play a bigger role for the next few trading hours.

By Kate Curtis from Trader’s Way

151

USD

The US dollar extended its losses to its major counterparts in yesterday’s trading, despite the lack of data from the US economy. Risk appetite was still strong, especially after China released the detailed set of economic and financial plans from its third plenum. For today, there are still no major reports lined up from the US but a few FOMC officials are set to testify. These officials have already stated their stances on the taper issue already so their remarks might not trigger such a huge reaction from dollar pairs.

EUR

The euro continued to edge higher against the dollar and the yen, as traders seemed to brush aside the impact of the latest ECB interest rate cut. Data from the euro zone was mixed, with the current account balance coming in below consensus and the trade balance meeting expectations of a 14.3 billion EUR surplus. For today, the German ZEW report could have a stronger impact on the euro, as the actual figure is expected to climb from 52.8 to 54.6.

GBP

The pound managed to stay afloat yesterday but not without a bit of selling pressure, as a BOE survey revealed that systemic risk was becoming a concern for banks and borrowers. Apparently, respondents to the survey believe that the low interest rate environment could soon result to uncontrolled house price inflation, which might then spark an asset price bubble. There are no reports due from the UK today as traders try to position ahead of the release of the BOE meeting minutes later this week.

CHF

The franc extended its gains against the dollar as USD/CHF dipped to the .9100 handle. There were no reports released from Switzerland so the move was mostly a dollar reaction. There are still no reports due from Switzerland today so USD/CHF’s movement could keep relying on dollar behavior and risk sentiment.

JPY

The yen regained ground against most of its major counterparts, as investors believed that a correction was in the cards after consecutive days of rallies. The Nikkei stock index was relatively flat in yesterday’s trading, which explains why the yen managed to recover. There were no reports released from Japan then and there are none due today so the yen pairs could continue to react to Asian equities’ performance.

Commodity Currencies (AUD, NZD, CAD)

The comdolls edged a bit lower yesterday, as risk appetite wasn’t that strong anymore. Besides, a correction from their recent rallies was due, giving traders a chance to enter at better levels if they think the risk rallies will resume. There were no major reports released from Australia and New Zealand, while Canada printed a better than expected foreign securities purchases report. Earlier today, Australia reported a rebound in its CB leading index and released the minutes of the RBA’s latest policy meeting, which revealed that the central bank isn’t likely to cut rates anytime soon. Up ahead, we have PPI figures from New Zealand but this isn’t likely to have a strong impact on NZD price action.

By Kate Curtis from Trader’s Way

152

Forex Major Currencies Outlook (November 20, 2013)

USD

The US dollar was unable to pocket more gains, as the risk-on trading environment kept its rallies at bay. There were no reports released from the US but cautious comments from Fed officials weighed on the lower-yielding currency. FOMC member Evans noted that the central bank is close to reaching $1.5 trillion in bond purchases, which led many to believe that the Fed might be forced to taper soon. However, Evans also stressed that the central bank is in no rush to reduce stimulus at this point. Bernanke echoed this stance in saying that interest rates will be kept low until the economic recovery shows strong momentum, and he reiterated that fiscal stability is also a priority. Dollar pairs could see more volatility today as the US releases its retail sales and CPI figures. Weaker than expected reports might trigger a sharp selloff for the dollar.

EUR

The euro managed to extend its gains to the yen and dollar, as EUR/JPY reached a new 4-year high. German ZEW economic expectations came in line with consensus at 54.6 but the euro was weighed down by downbeat remarks from ECB officials. Only the German PPI is up for release from the euro zone today and this isn’t expected to have a huge impact on euro price movement.

GBP

The pound was stuck in its range against the dollar but managed to rebound against the yen in yesterday’s trading, despite the lack of major reports from the UK. For today, the BOE meeting minutes are up for release and traders are expecting to hear positive remarks, as the central bank recently gave upbeat forecasts for hiring. A couple of BOE officials are also set to give speeches today, which might trigger volatility for pound pairs.

CHF

The Swiss franc held on to its current gains to the dollar, as USD/CHF tested the .9100 major psychological support level. There were no reports released from Switzerland then and only the ZEW economic expectations report is due today. The report could show an improvement from the previous 24.9 figure, which might allow USD/CHF to break below .9100.

JPY

The yen continued to weaken against its major counterparts as risk appetite remained strong yesterday. EUR/JPY surged to new 4-year highs while USD/JPY made another test of the 100.00 mark. There were no reports released from Japan yesterday while the trade balance released today was short of expectations at -1.07T JPY vs. the consensus at -0.88T JPY. The all industries activity index is due in today’s Asian session and a small improvement is eyed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls tried to extend their gains to the dollar, as AUD/USD climbed to the .9450 area while NZD/USD stayed above .8350. New Zealand inflation expectations for the quarter was slightly weaker at 2.3% versus the previous 2.4% while the RBA meeting minutes showed that the central bank isn’t looking to cut rates anytime soon. Up ahead we have Canadian wholesale sales and a speech by BOC Governor Poloz, which might spark volatility for Loonie pairs.

By Kate Curtis from Trader’s Way

153

USD

The US dollar was able to get back on its feet in yesterday’s trading, as the US retail sales report printed better than expected results. Headline retail sales was up by 0.4% while core retail sales edged up by 0.2%. This was stronger than the estimated 0.1% uptick for both. Headline CPI, on the other hand, fell short of consensus as it posted a 0.1% decline instead of the estimated flat reading. Core CPI was as expected at 0.1%. The dollar was also able to draw support from the FOMC meeting minutes, which showed that the Fed is still on track to taper before the end of the year. US PPI, initial jobless claims, manufacturing PMI, and Philly Fed index are up for release today and another round of strong figures could keep the dollar supported.

EUR

The euro gave up its gains to the dollar yesterday when ECB officials hinted that they are considering negative deposit rates. This means that the central bank would be charging banks for keeping cash stored in their vaults, thereby encouraging more lending activity. However, this tends to have a negative effect on overall interest rates, which means lower demand for the euro. Euro zone PMIs are up for release today and disappointments might confirm that further easing from the ECB is likely.

GBP

The pound was unable to keep up its recent rallies when the BOE monetary policy meeting minutes were less hawkish than expected. Apparently, there was some dissent regarding the economic forecasts, as some believed that it would take a longer time for the UK economy to meet its targets. Only public sector net borrowing and CBI industrial order expectations are due from the UK today.

CHF

The franc lost ground to the dollar in yesterday’s trading, triggering a bounce for USD/CHF from .9100 back to the .9200 area. The improvement in Swiss ZEW economic expectations from 24.9 to 31.6 was not enough to keep the franc afloat when the US printed strong consumer spending data. Swiss trade balance is up for release today but this isn’t likely to cause huge moves among franc pairs.

JPY

The yen resumed its selloff against most of its counterparts yesterday as the BOJ policy statement drew closer. Some are expecting to hear hints of further easing or potential stimulus once the sales tax increase rolls along. Aside from that, there are no other reports due from Japan so the BOJ statement could have a longer-term impact on yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar weakened in today’s trading session when China’s manufacturing PMI fell short of expectations. The actual figure came in at 50.4 instead of the estimated 50.9 reading. New Zealand credit card spending ticked lower at 3.2% versus the previous 5.1% reading. Meanwhile, Canadian wholesale sales was weaker than expected at 0.2% instead of the estimated 0.4% uptick, suggesting that consumer spending might be weak too. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader’s Way

154

USD

The US dollar had a mixed performance against its major counterparts, as currency-specific events dominated price action. In particular, remarks from central bank officials were a stronger driver of price action compared to US data and risk sentiment. Data from the US was also mixed, as the Philly Fed index fell short of consensus by falling from 19.8 to 6.5 instead of the estimated 15.6 reading. Initial jobless claims came in better than expected at 323K versus 333K while headline PPI was as expected at -0.2%. US flash manufacturing PMI improved to 54.3 from an upwardly revised 51.8. Up ahead, the US has a couple of speeches from Fed officials lined up and these aren’t likely to steer dollar pairs in a general direction unless they speak of taper prospects.

EUR

The euro initially sold off on the heels of weak French manufacturing and services PMIs but was able to recover later on when Draghi mentioned that the prospect of negative deposit rates wasn’t discussed in their latest monetary policy meeting. German PMI came in mixed, with the manufacturing figure as expected at 52.5 and the services PMI better than expected at 54.5. The region’s PMI was also mixed, as the flash services PMI was weaker than expected. Another speech from Draghi is on deck for today and it he is likely to reiterate his previous comments. As for economic data, only the German Ifo business climate index is due and it is likely to tick up from 107.4 to 107.9.

GBP

The pound was able to push for more gains against its counterparts yesterday when CBI industrial order expectations came in better than expected at 11, up from -4 and significantly higher than the estimate at 0. However, public sector borrowing was weaker than expected, reminding traders that the UK still has its share of debt troubles. There are no reports due from the UK today so it could be all about sentiment driving the pound.

CHF

The franc regained ground against the dollar yesterday, as the US had its share of weak data while Switzerland printed a trade balance in line with expectations. The surplus widened from 2.40 billion CHF to 2.43 billion CHF, reflecting stronger export activity. No reports are due from Switzerland today so the franc might be sensitive to risk taking.

JPY

The yen was still trading on a weak note yesterday, as BOJ officials confirmed that they’re ready to increase stimulus if necessary. For now though, they are likely to keep their easing program unchanged but Kuroda projected that the economy will reach its inflation target of 2% by March 2016. He also said that he doesn’t think that the yen is trading at abnormally low levels. After all, yen weakness could add support for the economy as it would make exports more affordable. No reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were both weighed down by central bank officials’ remarks yesterday, as AUD/USD broke below .9300 while NZD/USD tested .8200 support. An RBNZ official said that the Kiwi was overvalued but that intervention isn’t likely for now. He also said that monetary policy can only go so far when it comes to depreciating the currency. Meanwhile, Canada didn’t release any economic reports yesterday but the retail sales figures are up for release today. Headline retail sales could see a 0.3% uptick while core retail sales could show a 0.2% increase. Canadian CPI is also on tap today.

By Kate Curtis from Trader’s Way

155

USD

The US dollar gave up some of its recent gains to its major counterparts on Friday when traders booked profits ahead of the weekend. Against the yen though, the dollar continued its ascent as USD/JPY is now approaching the 102.00 mark. There were no economic reports released from the US economy last Friday. For today, only the pending home sales report is lined up and it is expected to show a 2.2% rebound from the previous 5.6% decline. A stronger than expected figure might provide the dollar another boost in today’s trading sessions.

EUR

The euro rebounded against its major counterparts and broke above the 1.3500 handle on Friday, despite rumors of negative deposit rates. Data from Germany was much stronger than projected, as the Ifo business climate figure surged from 107.4 to 109.3, reflecting stronger optimism in the sector. There are no reports due from the euro zone today so it remains to be seen whether the euro can be able to hold on to its recent gains and go for more.

GBP

The pound is currently testing the top of its range against the US dollar, as optimism for the UK economy lifted the British currency throughout the week. There were no reports released from the UK last Friday and today has only the BBA mortgage approvals data lined up. This is expected to show a small improvement from 43.0K to 45.2K, reflecting stronger demand for home loans and purchases. A higher than expected result could trigger an upside breakout from 1.6250 for GBP/USD while a weak reading might lead to a quick selloff or consolidation.

CHF

The franc resumed its winning ways against the dollar on Friday as USD/CHF sank below the .9100 major psychological level. At the moment, the pair is lingering at the bottom of a falling channel but a breakout could take place if more dollar weakness is seen. Swiss employment level is due today and it is expected to show a small rise from 4.17M to 4.19M.

JPY

The yen kept losing ground to its counterparts last week and until the start of this week, after BOJ officials emphasized their commitment to further easing if needed. Data from Japan is set for release by the end of this week so the yen could keep going on its recent slide unless we see a change in market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still trading on a weak note until the end of the week as commodities also saw strong declines. Gold is trading at its low levels, although analysts are expecting a quick bounce sooner or later. Data from Canada was mixed on Friday, as the core CPI and headline retail sales came in strong but the headline CPI and core retail sales fell short of expectations. There are no reports due from these comdoll economies today so risk sentiment might be a major driving factor.

By Kate Curtis from Trader’s Way

156

USD

The US dollar gave up some of its recent gains to its major rivals when pending home sales came in weaker than expected. The report printed a 0.6% decline for October even when analysts were projecting a 2.2% rebound from the previous 4.6% decline. This marked the report’s 6th consecutive monthly decline, which means that purchases were falling for half a year already. Up ahead, we have CB consumer confidence data and an improvement from 71.2 to 72.2 is eyed. A strong figure might mean more gains for the US dollar.

EUR

The euro chalked up losses against some of its counterparts yesterday when ECB official Hansson spoke of further rate cuts. There were no economic reports released from the euro zone yesterday and there are none lined up for today so it should be interesting to see whether remarks from more ECB officials could influence euro price action.

GBP

The pound was rejected at the 1.6250 level versus the dollar, as this minor psychological resistance lines up with the top of a long-term range. UK BBA mortgage approvals were weaker than expected at 42.8K versus the estimated 43.2K to 45.2K. Inflation report hearings are set for today and weaker inflation estimates could lead traders to believe that the central bank has room to ease if needed.

CHF

The franc was able to hold on to its recent gains, although it gave up a few against the US dollar. Swiss employment level was slightly better than expected at 4.20M, up from the previous 4.17M reading. There are no reports due from Switzerland today so it could be all about risk sentiment driving franc pairs and US data moving the USD/CHF pair.

JPY

The yen was able to recover against some of its major counterparts, as traders probably booked profits off some of their yen short positions. In addition, the release of the BOJ meeting minutes today revealed that some policymakers are concerned about downside price pressures. They also pointed out that there are plenty of risks to export growth, which might then weigh on overall economic performance later on. There are no other reports due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls still gave way to dollar strength, although AUD/USD and NZD/USD showed signs of retracing. RBA official Lowe noted that the Aussie is trading at historically high levels and did not rule out a central bank intervention. There are no reports due from Canada as the Loonie might keep reacting to falling oil prices. Meanwhile, New Zealand has its trade balance on tap for the next Asian trading session. A wider deficit is expected, which might then give RBNZ officials a chance to reiterate their views on the overvalued Kiwi.

By Kate Curtis from Trader’s Way

157

USD

The US dollar gave up more gains yesterday when the US CB consumer confidence report printed weaker than expected results. The figure dipped from 72.4 to 70.4 instead of landing at the estimated 72.2 reading. This shows that consumers are less optimistic about the US economy compared to the previous month, hinting at a potential downturn in spending later on. For today, US durable goods orders data is up and the headline figure is projected to show a 1.5% decline while the core figure could print a 0.5% uptick. Strong figures could help the dollar recover while another round of weak data could push it lower. Also due today is the initial jobless claims report since the U.S. will be on Thanksgiving holiday tomorrow.

EUR

The euro continued to climb against its major counterparts yesterday, despite more talks of negative deposit rates. There were no reports released from the euro zone but it appears that confidence in Germany, which is the region’s largest and strongest economy, is helping to keep the shared currency afloat. German GfK consumer climate data is up for release today and the index is slated to tick up from 7.0 to 7.1.

GBP

The pound was unable to make any headway past the .16200 mark yesterday as a dovish BOE inflation report hearing weighed on the currency. Carney clarified that the 7% unemployment rate target was a threshold and not an automatic trigger for monetary policy tightening. In fact, other policymakers echoed his cautious sentiment in saying that the central bank isn’t close to unwinding policy just yet. They cited weak domestic and global demand, along with the slack in business production and wage growth, as reasons for their careful assessment of the economy. UK’s second GDP estimate is up for release today and no revisions are expected from the 0.8% growth figure. UK quarterly business investment data is also due.

CHF

The franc took advantage of dollar weakness yesterday, although there were no reports released to provide support for the Swiss currency. Swiss UBS consumption indicator is lined up for today and it could show an improvement from the previous 1.56 reading. If that’s the case, the franc could be able to extend its gains. Otherwise, a bounce for USD/CHF might be in the cards.

JPY

The yen’s rally found legs yesterday when the Nikkei ended lower in Asian trading. Risk aversion seems to have supported the lower-yielding Japanese currency, as there were no reports released from Japan then. For today, Japan’s schedule is empty once again so yen trading might be sensitive to risk flows and Asian equity performance.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar continued its tumble in the charts when news of another major hedge fund liquidating its Aussie positions convinced traders to short the Aussie as well. The New Zealand dollar was also dragged down by this bearish news, although their trade balance triggered a quick bounce in today’s early Asian trading. No other reports are due from the comdoll economies today so it might be all about risk flows driving these currencies.

By Kate Curtis from Trader’s Way

158

USD

The US dollar gave up some gains on weak US data, as the durable goods orders figures were below expectations while the Chicago PMI printed a drop. However, the dollar was able to recover against most of its major counterparts when initial jobless claims came in strong and the UoM consumer sentiment figure was revised higher. There are no reports due from the US economy today as traders are off on their Thanksgiving holidays so it will be interesting to see whether profit-taking will trigger huge bounces among dollar pairs today.

EUR

The euro extended its climb against the dollar and the yen when the German GfK consumer climate report rose from 7.1 to 7.4 instead of just holding steady at 7.1 as expected. More data from Germany is up for release today, namely the employment figures and CPI. Medium-tier reports from large euro zone economies, such as Italy and Spain, are up for release today so a set of stronger than expected data might push EUR/USD and EUR/JPY higher.

GBP

The pound sustained its rallies in yesterday’s trading when the UK GDP was revised up from 0.8% to show 1.5% growth for the third quarter of the year. This was enough to push GBP/USD above its nearby resistance at 1.6200, signaling that more gains could be in the cards. However, CBI realized sales came in below consensus by falling from 2 to 1 instead of rising to 12. Up ahead, BOE Governor Carney is set to give a testimony and possibly reiterate that the central bank isn’t ready to unwind stimulus just yet.

CHF

The franc bounced back and forth against its counterparts as the Swiss currency was testing support levels. Only the UBS consumption indicator was released yesterday and it printed a small decline. For today, Swiss GDP is up for release and is expected to show a 0.5% growth figure. A weaker than expected reading might force the franc to let go of its recent gains but a strong report could push it to new highs.

JPY

The yen was able to stage a bit of recovery during the early trading sessions but gave up most of its gains to the dollar again during the US session. USD/JPY climbed past the 102.00 handle but appears to be making a pullback. There were no reports released from Japan then but earlier today we saw a 2.3% increase in retail sales, higher than the projected 2.2% figure but lower compared to the previous 3.0% reading. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls mostly gave up more ground to the dollar yesterday, as the downbeat sentiment continued to weigh on the Aussie and Kiwi. Data from Australia and New Zealand was actually strong today, as the ANZ business confidence report of New Zealand rose from 53.2 to 60.5 while Australia reported a strong jump in quarterl private capital expenditure. However, the bad news is that the previous report had a large downward revision. Canadian current account and medium-tier inflation figures are up for release later.

By Kate Curtis from Trader’s Way

159

USD

The US dollar had a mixed performance, as it gained against the yen and comdolls but lost ground to the pound. There were no reports released from the US yesterday since banks were on Thanksgiving holiday and there are also no major reports lined up for this Black Friday, leaving the dollar at the mercy of risk sentiment.

EUR

The euro was able to push a bit higher against the dollar but it seems that EUR/USD’s rally is losing steam. Against the yen though, the euro packed in more gains and took advantage of the lower-yielding currency’s weakness. As for data, German jobs figures were weaker than expected as euro zone’s largest economy printed a 10K rise in unemployment. Import prices were also weaker than expected but CPI was stronger than consensus at 0.2%. German retail sales and French consumer spending figures are due today.

GBP

The pound carried on with its rallies yesterday as traders continued to buy the currency on the heels of a large upward revision in the UK’s GDP the other day. Although the BOE said that they’re not looking to tighten anytime soon, they did refocus their FLS scheme to smaller firms, which means that they are already confident that the larger lenders could survive without stimulus. For today, UK HPI is up for release along with net lending to individuals data.

CHF

The franc is making waves in the forex market as it is also being treated as a safe-haven alternative now that the yen is losing its appeal. AUD/CHF and NZD/CHF have been breaking down their support levels recently and appear ready for more losses. Swiss GDP came in line with consensus at 0.5%, which helped provide support for the currency. For today, the KOF economic barometer is up for release and it could show a climb from 1.72 to 1.82.

JPY

The yen continued to weaken against most of its counterparts, except for the commodity currencies. The BOJ’s commitment to keeping easing in place is weighing on the Asian currency, along with some gains in the Nikkei. The Japanese figures released today came in mostly weaker than expected, leading to more gains for yen pairs as traders anticipated more stimulus later on. Industrial production, jobless rate, and household spending were all weaker than expected.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi were at the bottom of the pack yesterday, as downbeat sentiment for both Australia and New Zealand weighed on their currencies. Traders are waiting to see whether the central banks will intervene or not, so they are careful to establish long positions for these currencies. As for data, Australian private capital expenditure actually came in strong at 3.6% but was not enough to support the Aussie. Private sector credit, on the other hand, was weaker than expected. Canadian monthly GDP is up for release and a 0.1% uptick is eyed.

By Kate Curtis from Trader’s Way

160

USD

The dollar pairs were relatively quiet on Black Friday as there was a lack of liquidity in the forex market back then. Over the weekend, some currency pairs gapped up as it appeared that traders have a stronger risk appetite, particularly for those currencies whose countries are performing well. There have been no reports released from the US last Friday and for today, we have a few red flags lined up. First is the speech by Fed head Bernanke, who might clarify whether a taper could take place this month or not. Another event to watch out for is the release of the ISM manufacturing PMI, which is slated to dip from 56.4 to 55.2.

EUR

The euro managed to hold steady on Friday but it appears to be losing ground at the start of this week. Data from the euro zone was mostly weaker than expected last Friday, as French consumer spending and German retail sales both missed expectations. For today, Spanish and Italian manufacturing PMI are up for release and another round of disappointments might trigger a stronger euro selloff.

GBP

The pound managed to extend its gains after a quick pullback on Friday. GBP/USD breached the 1.6400 handle at the start of this week’s Asian trading session, as traders banked on the fundamental strength of the UK economy. Data from the UK was actually weak last Friday, as money supply and net lending to individuals fell short of expectations. UK manufacturing PMI is up for release today and a jump from 56.0 to 56.5 is expected.

CHF

The franc held steady against the dollar last Friday when Switzerland’s KOF economic barometer came in slightly above consensus. The figure climbed from 1.71 to 1.85, beating the estimate at 1.82. For today, the SVME PMI is up for release and a rise from 54.2 to 55.1 is expected, which might allow the franc to sustain its gains to the dollar and the euro.

JPY

The yen resumed its selloff to its major counterparts at the start of this trading week, as traders risk appetite was up. Data from Japan was mixed last Friday, as Tokyo core CPI came in better than expected while national core CPI met expectations. However, household spending and employment both came in short. For today, capital spending came in weaker than expected, fueling yen weakness. BOJ Kuroda is set to give a testimony later on.

Commodity Currencies (AUD, NZD, CAD)

The comdolls rebounded against the dollar on Friday and today as we got a dose of promising data from China, Australia, New Zealand and Canada. Canada’s monthly GDP was better than the estimated 0.1% uptick as the actual figure showed 0.3% growth. China’s official manufacturing PMI came in line with estimates at 51.4 over the weekend while the HSBC final manufacturing PMI was better than expected at 50.8. New Zealand’s overseas trade index showed a 7.5% increase while Australia printed strong building approvals and company operating profits a few hours ago. No other reports are due from these economies for the rest of the day.

By Kate Curtis from Trader’s Way

161

USD

The dollar refused to back down against the pound and the euro in yesterday’s trading, although it lost some ground to the comdolls as risk appetite bounced back in the Asian trading session. Data from the US was better than expected, as the ISM manufacturing PMI improved from 54.3 to 54.7 instead of declining to the estimate at 55.2. For today, only a couple of medium-tier reports are up for release from the US economy and these aren’t likely to cause a huge impact on dollar movement.

EUR

The euro lost ground to the dollar yesterday, as EUR/USD let go of the 1.3600 handle and dipped to the 1.3500 area. Data from the euro zone was mixed, as the Spanish manufacturing PMI disappointed and printed a contraction while the Italian PMI came in line with expectations at 51.4. Spanish unemployment change data is up for release today and a weak figure might push the euro lower against its counterparts while a good reading could pave the way for a recovery.

GBP

The pound was unable to sustain its rallies against the dollar yesterday but it did take advantage of yen weakness. UK manufacturing PMI was much stronger than expected, as the actual figure climbed to 58.4 while the previous figure was revised up from 56.0 to 56.5. Construction PMI is up for release today and it is expected to show a dip from 59.4 to 59.3 but a strong climb might push the pound higher against its counterparts again.

CHF

The franc tried to edge higher yesterday but let go of some of its gains to the dollar when US data came in strong. Swiss SVME PMI was much better than expected at 56.5 versus the estimate at 55.1 and the previous 54.2 reading. There are no reports due from Switzerland today so we might see a bit of consolidation from franc pairs.

JPY

The yen lost ground to its counterparts once more although the Nikkei posted a loss for the day. Japanese capital spending was weaker than expected and BOJ Kuroda stressed the central bank’s willingness to add stimulus if needed, leading to another massive yen selloff. Japanese average cash earnings came in line with consensus at 0.1% earlier today but wasn’t enough to trigger sharp moves from yen pairs yet.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to breathe a sigh of relief yesterday when data from China was able to provide support for the Aussie and Kiwi. At the same time, actual data from Australia and New Zealand surprised to the upside. Earlier today, Australian retail sales came in stronger than expected at 0.5% yet the RBA said that the Aussie is still overvalued, eventually leading to Aussie weakness. No other reports are due from these economies for the rest of the day’s trading sessions.

By Kate Curtis from Trader’s Way