Daily Market Outlook by Kate Curtis from Trader's Way

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Forex Major Currencies Outlook (March 14, 2013)

USD: Bullish

The U.S. dollar once again found support from stronger than expected economic data during yesterday’s trading. The retail sales figure for February came in at 1.1%, better than the estimated 0.5% uptick, while the core version posted a 1.0% increase for the month. For today, the U.S. will print its PPI and initial jobless claims, both of which could once more boost the U.S. dollar if the actual data comes in strong.

EUR: Neutral

There aren’t a lot of catalysts from the euro zone these days as EUR/USD continues to trade carefully below the 1.3000 area. For now, euro pairs are acting sensitive to their counter currencies’ events. In particular, EUR/USD sold off when strong U.S. retail sales boosted the dollar while EUR/JPY edged higher on uncertainty in Japan.

GBP: Bearish

GBP/USD seems to have found resistance close to 1.5000 during yesterday’s trading as strong U.S. retail sales prevented the pair from heading any higher. There are no major reports from the U.K. today but the downbeat outlook for the U.K. and expectations of further BOE easing could continue to weigh the pound down.

AUD: Bullish

The Australian economy just printed a very strong jobs report for February as the economy added 71.5K jobs during the quarter and kept the jobless rate steady at 5.4% instead of rising to 5.5%. This suggests that the jobs sector is making a strong rebound and doesn’t need further stimulus from the RBA. On top of that, the previous month’s figure enjoyed an upward revision from 10.4K to 13.1K

NZD: Bearish

The Kiwi sold off aggressively after the RBNZ delivered its monetary policy statement during today’s Tokyo session. The central bank did keep rates on hold at 2.50% as expected but Wheeler noted the downturn in domestic economic activity. He blamed the worsening drought conditions and the strength of the New Zealand dollar for this slowdown, citing that the Kiwi is overvalued by 10-15%.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 15, 2013)

USD: Neutral

The U.S. dollar lost a lot of ground to its major currency counterparts during yesterday’s trading as we saw a short squeeze, particularly for GBP/USD and EUR/USD. It seems that the selloffs are no longer able to carry on and most traders simply decided to book profits at the pairs’ previous lows. Data from the U.S. has been mostly strong as the PPI and core PPI came in line with expectations while the initial jobless claims report printed a better than expected figure. Watch out for today’s set of data (CPI, core CPI, Empire State manufacturing index, and University of Michigan consumer sentiment figure) during the New York session as these could confirm whether the U.S. dollar is still trading on fundamentals or has shifted to risk sentiment.

EUR: Bearish

The euro may have outpaced the U.S. dollar by a huge lead during yesterday’s trading as most traders decided to close out their short euro positions at the pair’s recent lows. However, there’ s a chance that the recent EUR/USD rally might not have enough energy to stay above the 1.3000 major psychological level for long as fundamentals in the euro zone are still very weak. Take note though that EU officials are having their economic summit today until the end of the week, which might be an event risk for euro pairs.

GBP: Bearish

The sterling was also able to outrun the U.S. dollar during yesterday’s trading as GBP/USD successfully broke above the 1.5000 major psychological level and later on the 1.5100 major psychological level. Some say that this was simply a result of a short squeeze for the pair as traders locked in their profits on their short pound positions. After all, fundamentals in the U.K. are still shaky and the BOE is still inclined to implement further easing. If the rally shows signs of fading, watch out for potential reversals around the major and minor psychological levels, possibly during the U.S. session.

AUD: Neutral

It looks like the recently released strong jobs figures from Australia were a fluke as their statisticians reported an error in the report. However, the Australian dollar still managed to rally strongly against the U.S. dollar, mostly because of the recent short squeeze. No major reports are due from Australia for the rest of the day as the pair’s rally could retreat upon reaching the 1.0400 major psychological level, depending on how U.S. economic releases turn out.

NZD: Neutral

Despite the downbeat RBNZ rate statement wherein Wheeler talked about the overvalued Kiwi, the New Zealand dollar was able to pocket huge gains against the U.S. dollar as it rallied back above .8200 during yesterday’s U.S. session. If the effect of the short squeeze lasts until the end of the week, the Kiwi could keep rallying to its previous highs. On the other hand, if the rally fizzles, NZD/USD could be on its way to test the .8200 support once more.

JPY: Bullish

Japanese Prime Minister Shinzo Abe seems to be having a tough time garnering enough support for Iwata, who he wants to appoint as deputy governor of the BOJ. Iwata is a known dove, just like the newly appointed BOJ head Kuroda, and putting him in position would mean more aggressive policies to ward off deflation and weaken the yen. Unless Abe is able to get enough votes for Iwata’s nomination though, the yen could continue to gain steadily.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 18, 2013)

USD: Bearish

Several weekend gaps were made after the short squeeze took place last week as most major currency pairs opened right where they were prior to the profit-taking on Thursday and Friday. This presents an opportunity for weekend gaps to get filled as there are no top-tier economic reports from any of the major economies today. Take note though that the FOMC interest rate decision is coming up midweek and traders could also start pricing in expectations for the event.

EUR: Bullish

The euro underwent a strong rally on Friday as traders continued to book their profits from their recent short trades. However, EUR/USD started the week back below the 1.3000 major psychological level, revealing that the sentiment for the region is still dovish. Nonetheless, with an empty euro zone economic schedule for the day, traders could close the weekend gap and allow the pair to pullback to the 1.3000-1.3050 levels.

GBP: Neutral

After making a strong rally towards the end of the week, GBP/USD is now treading carefully above the 1.5100 major psychological support. There are a bunch of top-tier reports due from the U.K. this week, namely the MPC meeting minutes and claimant count change, along with the CPI and retail sales data. Pound pairs could be in for sideways trading prior to the release of these reports.

AUD: Bullish

There are no reports due from Australia today but traders could start pricing in their expectations for an upbeat RBA monetary policy meeting minutes release tomorrow. Recall that the central bank decided to keep rates unchanged during their recent monetary policy decision as RBA Governor Stevens reiterated that the previous easing efforts are just starting to kick in. After that, Australia started printing strong economic figures, which could mean that the RBA might be more hawkish about the country’s economic prospects this time.

NZD: Neutral

Although last week’s RBNZ monetary policy announcement revealed that Governor Wheeler thought that the Kiwi strength was undermining economic growth, NZD/USD managed to rally from the short squeeze that took place before the end of the week. This week, the downbeat assessment for the New Zealand economy could be highlighted by the GDP release later on this week. Until then, NZD/USD could trade carefully for the next few days.

CAD: Netural

USD/CAD price action is still much choppier compared to most major currency pairs as fundamentals in Canada haven’t been very clear. This week, the Canadian retail sales release should provide more insight on how the economy is performing as consumer spending takes up a huge chunk of overall economic growth.

JPY: Bearish

BOJ Deputy Governor nominee Iwata was finally able to secure enough votes to take his position in the central bank. This means that the doves Kuroda and Iwata are heading the BOJ and that we could expect aggressive easing measures down the line as Japan tries to fight deflation and keep the yen’s value down. Traders just booked their short yen profits recently though, which suggests USD/JPY could pull back to the 94.00 area of interest though before resuming its rally.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 19, 2013)

USD: Bullish

Weekend gaps on most dollar pairs seem to have been filled at the moment, except for the large one on EUR/USD. Risk is off in the markets at the moment as equities have been sliding and higher-yielding assets are selling off, suggesting a potential safe-haven dollar rally. There are no major reports due from the U.S. today as only building permits and housing starts data are due during the U.S. session. Building permits could climb from 0.90 million to 0.93 million while housing starts are projected to rise from 0.89 million to 0.92 million in February.

EUR: Bearish

The recent bailout in Cyprus is wreaking havoc in the financial markets as traders started to get jitters about a comeback of the euro zone debt crisis. Although Cyprus is just a small country in the region, contagion is still possible to other banks in the area. As for economic releases, the German ZEW economic expectations and overall euro zone ZEW economic expectations data are due during the London session today. The German ZEW could dip from 48.2 to 47.9 for the current month while the euro zone figure is expected to climb from 42.4 to 43.7. Weaker than expected results could trigger a sharper euro selloff.

GBP: Bearish

The pound was able to take advantage of the short squeeze that took place late last week but GBP/USD and GBP/JPY are currently consolidating as traders await the release of the U.K. CPI and the BOE inflation report. Consumer prices are projected to be up by 2.8% on an annual basis, higher than the previous reading of 2.7% but still within the central bank’s target. In case the actual figure moves out of the government’s target, the BOE will have to submit an Inflation Letter to the Chancellor explaining why it happened and what the central bank plans to do.

CHF: Neutral

There are no reports due from Switzerland today but the Swiss franc is being closely watched by European traders seeking a safer currency. The gap on USD/CHF hasn’t been filled yet, which suggests a potential selloff for the pair at least back to the .9400 major psychological support level.

JPY: Neutral

USD/JPY found support at the 94.00 previous resistance level and appears ready to test its recent highs around 96.75. There are no major reports due from Japan today or tomorrow as Japanese banks will be off on a holiday. EUR/JPY’s weekend gap still hasn’t been filled as the pair hasn’t reached the 124.50 minor psychological resistance yet.

Commodity Currencies (AUD, CAD, NZD): Neutral

Canadian wholesale sales and manufacturing sales are scheduled for release during the New York session and these reports could provide enough volatility for USD/CAD. Both reports are expected to print rebounds for January, as manufacturing sales could increase by 0.7% while wholesale sales might rise by 0.4%, suggesting a recovery in consumer spending later on. As for the Australian dollar, the RBA just released the minutes of their latest monetary policy meeting and noted that the economy has shown positive signs lately. No economic reports are due from New Zealand.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 20, 2013)

USD: Neutral

Most dollar pairs could be in for a lot of tight consolidation during today’s trading sessions as traders sit on their hands prior to the FOMC monetary policy statement. Their most recent rate decision included a mention of potential tapering off of monetary policy stimulus in order to keep inflationary pressures in check yet Federal Reserve head Ben Bernanke was quick to dismiss expectations of an early withdrawal of bond purchases. Today’s FOMC rate decision could set the record straight on what policymakers think should be done about the U.S. economy and if we hear of more concrete plans to tighten monetary policy sooner than later, the U.S. dollar could resume its rally. Otherwise, remarks on persistent weaknesses in the economy could trigger a selloff.

EUR: Bearish

Lawmakers over at Cyprus rejected the recently announced bailout proposal for the country as this involves an unusual one-time tax on deposits in Cypriot banks. This prompted fears of a bank run as some depositors rushed to withdraw their bank holdings to avoid getting slapped with high tax rates. However, the Cypriot parliament voted against this bailout and seems to be considering asking for extra funding from Russia instead. Unless Cyprus is able to get guarantees of enough liquidity to shore up its troubled banks, it could edge closer to a default which would be very negative for the euro.

GBP: Bearish

Pound pairs are trading very carefully these days as yesterday’s inflation releases failed to spark any volatility in GBP/USD. The pair is still stuck around the 1.5100 to 1.5175 area, awaiting for more clues from the U.K. economy. The BOE is scheduled to release the minutes of their latest monetary policy meeting today and this report should shed light on why the central bank still decided to make no changes to its asset purchase program. The minutes would reveal exactly how many policymakers voted for further easing and a higher number this time would reveal that the central bank is becoming increasingly dovish.

JPY: Neutral

Japanese banks are on holiday today, which suggests quiet trading for yen pairs. Markets could be more focused on central bank rhetoric from the U.S. which is awaiting the FOMC statement and the U.K. which will soon release the BOE’s monetary policy meeting minutes. This suggests that USD/JPY and GBP/JPY might be more volatile today compared to other yen pairs.

CHF: Neutral

The Swiss ZEW economic expectations report, which improved from -6.9 to 10.0, in the previous month is set for release today. Another improvement could boost the franc against the U.S. dollar and the euro while a negative reading could trigger a sharp selloff. Franc rallies have been subdued lately as the SNB remains committed to keep the franc’s value down so selling the franc might yield a larger profit potential.

Commodity Currencies (AUD, NZD, CAD): Bearish

The Australian dollar, New Zealand dollar, and Canadian dollar have all been sliding lower against the lower-yielding U.S. dollar for the past few days as risk aversion is hurting the higher-yielding and riskier assets. The ongoing bailout concerns in Cyprus is mostly to blame for the lack of risk appetite even in equity markets as commodity currencies are very sensitive to market sentiment. New Zealand is set to print its Q4 2012 GDP figure today and a 0.9% expansion is eyed versus the previous 0.2% uptick in growth. A stronger than expected figure could boost the New Zealand dollar while a weak one could result in a selloff.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 21, 2013)

USD: Neutral

Dollar pairs are stuck in consolidation so far as EUR/USD keeps testing the 1.2950 minor psychological resistance while GBP/USD is still moving sideways around the 1.5100 area. The recent FOMC statement seemed to be a non-event as the Fed kept rates on hold and asset purchases unchanged as expected while Fed head Bernanke didn’t announce anything out of the ordinary. He did reiterate that the central bank would continue to watch employment and inflation very closely in order to determine whether the U.S. economy could survive without monetary policy easing or not. The Fed also lowered their growth forecasts for the year but also predicted slightly lower unemployment later on. For today, jobless claims, existing home sales, and the Philly Fed index are set for release and these reports could spark some volatility among dollar pairs.

EUR: Bullish

EUR/USD has been stuck below the 1.2950 minor psychological resistance lately as the weekend gap still hasn’t been filled. EUR/JPY, on the other hand, is making another test of the 124.00-124.50 area as the pair bounced off its previous lows yesterday. Today’s euro zone PMIs could be big movers for the euro pairs as these reports tend to post nearly the same results. Both German manufacturing and services PMIs are expecting to show improvements for February while staying above the 50.0 mark indicating expansion. French manufacturing and services PMIs are projected to stay below 50.0, but the contraction is expected to slow down in February.

GBP: Neutral

The recently released BOE meeting minutes did spark a bit of volatility during yesterday’s trading but failed to push GBP/USD in a clear direction. The pair remains stuck just above the 1.5100 mark and it appears that the U.K. retail sales report might be the major catalyst for today. Retail sales are projected to rebound by 0.5% in February after slumping by 0.6% during the previous month. Stronger than expected data could eventually push GBP/USD to break to the upside.

JPY: Bearish

The yen sold off against most of its counterparts during yesterday’s trading and might be in for another round today. BOJ Governor Kuroda is scheduled to give his first speech as central bank today and he could outline their plans regarding monetary policy. Remember that Kuroda is a fan of aggressive monetary policy easing, especially since Japan needs to ward off deflation and keep the yen low. Watch out for additional volatility among yen pairs during Kuroda’s speech around 10:00 am GMT.

CAD: Bullish

USD/CAD has been consolidating inside a symmetrical triangle on the 1-hour chart as traders await the release of Canadian retail sales today. The report could show that headline consumer spending rebounded by 0.4% this January after slipping by 0.9% in December while core retail sales could recover by 0.6% after dropping by 2.1% in December. Strong figures could push USD/CAD to break to the downside while weak data could trigger an upside breakout.

AUD: Bullish

There are no major reports due from Australia today as Aussie pairs could simply react to the recent Chinese PMI release or any changes in risk sentiment. The HSBC flash manufacturing PMI in China came in stronger than expected at 51.7 versus 51.2 and the previous 50.4 reading, reflecting stronger expansion in their manufacturing sector. Since China is Australia’s largest importer, improved manufacturing activity could translate to higher demand for Australia’s commodities.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 28, 2013)

USD

Markets could be in for a quiet trading day today as there are no top-tier releases from the major economies that could have a significant impact on risk sentiment or a lasting effect on dollar pairs’ movements. The U.S. is set to print its final GDP reading for the last quarter of 2012 and an upward revision from the previous 0.1% figure is expected. Analysts are expecting the final figure to come in at 0.5%, which might be positive for the dollar as it would indicate that growth was stronger than initially estimated. Keep an eye out for the release of the Chicago PMI as well, with the report expected to print a drop from 56.8 to 56.5.

EUR

The euro zone received mixed data today as Germany printed weaker than expected employment figures yet showed higher than expected retail sales. Consumer spending was up by 0.4% instead of the estimated 0.5% decline while the employment change fell short of expectations of the 2K increase in hiring and posted a 13K drop instead. No other reports are due from the euro zone today as EUR/USD still hangs on to the 1.2800 area.

GBP

Only the low-tier index of services was released from the United Kingdom today and the report came in at -0.2% as expected. This is lower compared to the previous reading that came in flat. No other reports are due from the U.K. today yet GBP/USD continues to edge slightly higher.

JPY

Japan is set to print its household spending report and CPI data towards the end of today’s U.S. session. Household spending is projected to rise by 0.4% on an annual basis, down from the previous 2.4% reading. The Tokyo core CPI is expected to come in at -0.6%, same as the previous reading, while the national core CPI could print a -0.4% figure. Lower than expected inflation figures could push the BOJ to implement even more aggressive easing policies as soon as possible.

CHF

There are no reports due from Switzerland today, which suggests that franc pairs could be in for quiet trading for the rest of the sessions.

Commodity Currencies (AUD, NZD, CAD)

Australia and New Zealand are on bank holidays today in observance of Holy Thursday. Canada is set to print its monthly GDP figure and possibly show a 0.1% rebound in growth from the 0.2% dip seen during the previous month. Weaker than expected data could trigger a sharp Loonie selloff as this might place Canada in danger of posting negative growth for the entire quarter.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (March 29, 2013)

USD

Most banks are on a holiday today, paving the way for quiet trading conditions. Take note though that it’s the last trading day for the month and the quarter, which could also set the stage for profit-taking moves towards the end of the U.S. session. Bear in mind that low liquidity could result in more volatile price action as well. The U.S. is scheduled to release a few medium-tier reports, including the core PCE price index which is rumored to be the Fed’s preferred inflation measure.

EUR

The euro managed to edge slightly higher against the U.S. dollar during yesterday’s trading but it seems the currency is unable to make any further headway. European banks are on holiday today but France is set to print its consumer spending report within today’s London session and possibly report a 0.3% rebound from the previous 0.8% decline.

GBP

GBP/USD is testing the major psychological resistance at the 1.5200 area once more as the pair climbed in yesterday’s trading. Without any major market catalysts on tap, it seems unlikely that GBP/USD could make a strong break above the 1.5200 to 1.5250 levels. Do stay on your toes for potential profit-taking around those recent levels.

CHF

Swiss banks are on holiday today, which suggests that franc pairs could be in for sideways trading for most of the day. USD/CHF seems set on staying above the -.9500 major psychological support while EUR/CHF has been edging lower gradually.

JPY

Japanese housing starts came in much stronger than expected at 3.0% for February, better than the estimated 1.0% decline but lower than the previous 5.0% jump in January. No other reports are due from Japan this week as the yen pairs could be vulnerable to profit-taking scenarios and possible movements after Japanese repatriation efforts are booked.

Commodity Currencies (AUD, NZD, CAD)

There are no economic reports due from these commodity-dependent economies for the day, which suggests that AUD/USD, USD/CAD, and NZD/USD could simply take their cues from U.S. reports or might be in for quiet trading until the end of the week.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 1, 2013)

USD

Traders are now back from the shortened trading week last week, which suggests we could see more action on the charts for the coming days. Today, the U.S. will release its ISM manufacturing PMI for March and possibly show that the figure stayed at 54.2 for the period. A higher than expected reading would reflect a stronger expansion in the industry, which would be positive for the U.S. economy and possibly the U.S. dollar. A weaker than expected result could hint at slower manufacturing activity, which could be negative for the U.S. dollar.

EUR

European banks are still on a holiday today, which could mean euro pairs are in for quiet trading once more. Take note though that Cyprus banks are set to reopen this week and it would be the start of deposit taxes and withdrawal limits. So far, no bank run has been reported but it is likely that flight of capital will be seen, particularly for foreign investors with large deposits in the country. If that’s the case, the euro could head further south in the next few trading days.

GBP

Banks in the United Kingdom are still on holiday for today so pound pairs might see more sideways movement for the next few hours. Traders might want to start pricing in their expectations for this week’s BOE rate decision and business PMIs, which could dictate pound price action for the near term. The BOE is expected to keep rates and bond purchases unchanged but we might hear of dovish remarks from King if the manufacturing and construction PMI releases this week turn out worse than expected.

CHF

There are no reports due from Switzerland today as USD/CHF and EUR/CHF continue to trade carefully. When trading these pairs, make sure you keep tabs on updates regarding Cyprus’ banking situation or U.S. economic data (ISM manufacturing PMI) to figure out where they could be headed.

JPY

Japan just released a couple of weaker than expected figures during today’s Asian session, which could weigh on the yen for the next few hours. The Tankan manufacturing index came in at -8 from -12 instead of rising to -7. The non-manufacturing component rose from 4 to 6, short of the consensus at 8. These show that manufacturing and services activity in Japan is weaker than projected for the first quarter of 2013.

Commodity Currencies (AUD, CAD, NZD)

There are no reports due from Australia, Canada, or New Zealand for today. China just printed weaker than expected manufacturing PMI for March as the reading climbed from 50.1 to 50.6 instead of the projected 51.6 reading. Meanwhile, the HSBC flash manufacturing PMI came closer in line with the consensus of 51.7 as it logged in a 51.6 reading for March.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 2, 2013)

USD

The weak U.S. ISM manufacturing PMI figure for March triggered a round of dollar selling during yesterday’s New York session as the actual reading slipped from 54.2 to 51.3. This reflects how the expansion in the manufacturing industry slowed down during the month, making traders worry that the U.S. will be unable to sustain its recovery. For today, there are no major U.S. reports on tap so we might see quiet trading conditions during the New York hours.

EUR

The euro was able to recover against the U.S. dollar during yesterday’s trading hours despite the lack of liquidity during the London session. Only medium-tier reports are due from the euro zone today but these reports could still usher in some volatility for euro pairs. Germany will be releasing its CPI while Spain will print its employment data and manufacturing PMI. Italy is also set to report is manufacturing PMI during the euro session. Bear in mind that weaker than expected readings could weigh on the euro while stronger than expected reports could give the shared currency a boost. Euro zone employment data is also set for release later on during the day.

GBP

The pound was able to take advantage of dollar weakness during yesterday’s market hours yet the currency might be forced to return its recent gains today if the U.K. manufacturing PMI falls below expectations. The reading for March is projected to improve from 47.9 to 48.9, reflecting slower contraction in the industry. If it fails to impress, it could have a negative impact on the upcoming BOE rate decision, which might lead traders to start selling the pound early. After all, policymakers did remark that they will be keeping close tabs on business surveys to figure out if more easing is necessary or not.

CHF

Switzerland will be reporting its SVME PMI figure for March during today’s London session. The reading is expected to dip from 50.8 to 50.5 for the month, showing that the expansion in the manufacturing industry was slower during the period. Stronger than expected data could push USD/CHF lower while weaker than expected results could give the pair a boost.

JPY

There are no major releases from Japan for now as traders await the BOJ interest rate decision on Thursday. Yen pairs are trading on country-specific events, with USD/JPY selling off after the U.S. printed a weak ISM manufacturing PMI figure.

Commodity Currencies (AUD, CAD, NZD)

The RBA decided to keep rates on hold at 3.00% as expected, barely triggering any reaction on Aussie pairs. Governor Glenn Stevens noted that while global growth has slowed below average pace, downside risks to the Australian economy have been reduced. He remained optimistic as he pointed out that there are still plenty of opportunities for growth. As for Canada and New Zealand, there are no reports on their schedules, which might mean we’ll see mostly sideways trading for USD/CAD and NZD/USD.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 3, 2013)

USD

A couple of top-tier data are due from the US today. These are the ADP non-farm employment change and the ISM non-manufacturing PMI. The ADP report could show a slight improvement from 198K to 203K for March, reflecting a slight increase in hiring. Meanwhile, the ISM report is expected to post a dip from 56.0 to 55.9, showing that manufacturing still expanded during the month. Take note that the US dollar is trading on fundamentals lately, which suggests that strong data could boost the dollar while weak figures could spark a selloff.

EUR

There are no major reports from the euro zone today, which could suggest quiet trading for euro pairs. Take note though that there were several weak data released from euro zone’s top economies recently, as Spain and Italy both printed weak manufacturing PMIs, suggesting that growth isn’t so strong in some of the large nations in the region.

GBP

Another potential pound selloff could be in the cards if the British construction PMI disappoints. Yesterday, the weaker than expected manufacturing PMI set off a massive round of pound selling, pushing GBP/USD to the 1.5100 area. The construction report could print an improvement from 46.8 to 47.7 but a disappointment is likely since mortgage approvals are down in the past few months.

CHF

Weaker than expected Swiss SVME PMI is lifting franc pairs for now as there are no major reports on Switzerland’s schedule. Keep an eye out for euro zone data or US reports when trading EUR/CHF or USD/CHF.

JPY

Earlier today, Prime Minister Abe and BOJ heads Kuroda and Iwata spoke in front of the Japanese parliament and outlined some of their plans for monetary policy. They are considering scrapping the bank note rule, which is a limit on the total government asset purchases. If this happens, the BOJ could have more scope for easing as they could decide to increase asset purchases, extend the duration of longer-term bonds, or implement an open-ended asset purchase program just like the Fed. The decision is still up to the rest of the BOJ policymakers and we’ll hear more of this on the BOJ rate statement tomorrow.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies managed to stay resilient in yesterday’s trading as the 7.4% rise in ANZ commodity prices boosted these currencies. In addition, Australia’s trade balance came in strong as the deficit shrank to 0.18 billion AUD. No other reports are due from the commodity-dependent economies for the rest of the day, which suggests that US data could have a large impact on the price action of AUD/USD, USD/CAD, and NZD/USD.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 4, 2013)

USD

The U.S. dollar suffered another selloff during yesterday’s trading as the economy printed a couple of weaker than expected data. The ADP non-farm employment change, which can be considered as a preview of the NFP release, came in below the expected 203K reading and printed a mere 158K increase in hiring for March. Meanwhile, the ISM non-manufacturing PMI came in at 54.4 instead of the estimated 55.9 figure, showing that the expansion in the industry slowed down more than expected. There are no major releases from the U.S. today but be mindful of speeches from FOMC members Bernanke, Yellen, and George as they could talk about future monetary policy plans.

EUR

The euro was able to recover slightly against the U.S. dollar, which suffered a selloff due to weak U.S. data. The only report released from the euro zone yesterday was the CPI flash estimate which came in higher than expected at 1.7%. The ECB rate decision today could be a bigger market mover for euro pairs even though the central bank could still keep rates on hold for the meantime. However, recent uncertainties in the euro zone could result to a less upbeat statement from Governor Draghi, which might weigh on the euro.

GBP

Despite weaker than expected construction PMI from the U.K., the pound managed to pocket a few gains as GBP/USD pulled up to the 1.5150 area. The construction PMI came in at 47.2 from 46.8, a slight improvement but still lower than the estimated 47.7 reading. With BOE policymakers keeping close tabs on business surveys, the weaker than expected PMIs might warrant a pessimistic statement from the BOE during the interest rate decision today. No monetary policy changes are expected but BOE Governor King could focus on the challenges to the British economy.

CHF

There were no major reports released from Switzerland during yesterday’s trading but the franc managed to catch some gains as USD/CHF fell from 0.9500 due to weak U.S. economic data. There are no reports due from Switzerland today which suggests that franc pairs could move to the tune of economic data from other economies.

JPY

The BOJ announced their new quantitative and qualitative easing measures today, triggering a sharp yen selloff. Kuroda mentioned that they will keep implementing these measures until the economy is able to achieve its 2% inflation target. They doubled their monetary base for easing, eliminated the bank note rule, and declared that they plan to achieve their inflation goal within two years. The vote on these aggressive easing measures was close to unanimous, signaling that central bankers are very serious about warding off deflation. Yen selling could continue for the rest of the day as USD/JPY edges close to 94.00.

Commodity Currencies (AUD, NZD, CAD)

Commodity currencies were unable to sustain their rallies during yesterday’s trading as weak economic data weighed on risk sentiment and dragged higher-yielding currencies lower. AUD/USD fell short of testing the 1.0500 major psychological level while NZD/USD came close to .8450. Australia released stronger than expected building approvals and retail sales data for February during today’s Asian session, confirming that the recent RBA easing efforts are just starting to take effect. No other reports are due from the comdoll economies for the rest of the day as AUD/USD, USD/CAD, and NZD/USD could be swayed by risk sentiment once more.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 5, 2013)

USD

The U.S. dollar rallied against most of its counterparts during the Asian session and first few hours of the London session as the strong USD/JPY rally affected other dollar pairs. However, the dollar choked up its recent gains to the euro, pound, and commodity currencies when risk appetite surged later in the day. Weekly jobless claims data came in weaker than expected, confirming that the U.S. jobs market is currently struggling. The upcoming NFP release today should provide a better picture of how the labor market is faring as the actual figure could post a weaker increase of 198K for March. Note that the ADP non-farm employment change figure and the Challenger job cuts report both posted bleak results, which hint at a downside surprise for the NFP.

EUR

The euro lost ground to the U.S. dollar when ECB Governor Draghi sounded more pessimistic than before in his recent rate statement. However, the central bank still refrained from making any monetary policy changes as Draghi emphasized that they’re running out of options. Only the euro zone retail sales and final GDP figures are on tap from the region today, which suggests that the euro might rather take its cue from the resulting sentiment from the U.S. NFP report.

GBP

Despite the quick GBP/USD selloff that took place during the start of the London session, the pair was able to recover right away when the BOE didn’t announce any additional stimulus measures. On top of that, services PMI came in stronger than expected and showed a large expansion for the month of March as the reading came in at 52.4 instead of declining from 51.8 to 51.4. Only the Halifax HPI is due from the U.K. today and a weaker increase in house prices is expected.

CHF

There were no reports released from Switzerland yesterday but USD/CHF managed to stay below the .9500 handle despite the strong round of dollar-buying that took place. Today, Switzerland will print its foreign currency reserves report. Note that the previous release hinted that the SNB’s peg is growing more and more expensive and today’s release should highlight the unsustainability of their intervention efforts.

JPY

The yen continues to sell off because of the BOJ’s aggressive easing plans announced yesterday. USD/JPY has already surged past key resistance levels and appears to be testing 97.00 prior to the NFP release, which could spark a quick selloff. However, analysts believe that the pair is headed for the 100.00 mark as the additional stimulus from the BOJ should keep the yen’s value down.

Commodity Currencies (AUD, CAD, NZD)

Aside from the strong Australian retail sales and building approvals data, there weren’t any other reports printed from the comdoll economies yesterday. This left the currencies vulnerable to dollar behavior and risk sentiment, which might be the same case for today. Canada is set to print its trade balance, jobs data, and Ivey PMI later today though and this could spark volatility for USD/CAD.

By Kate Curtis from Trader's Way

 

[katetrades]

USD/CHF Break and Retest Scenario (April 8, 2013)

The disappointing March NFP from the U.S. triggered a sharp selloff for USD/CHF, taking the pair below the .9400 significant support level and bottom of the previous range.

It seems that a retest of the support-turned-resistance level could be in play for today or the next few days this week after the pair found support close to the .9300 handle. The .9400 major psychological level is in line with the 38.2% Fibonacci retracement level on the 4-hou time frame.

Stochastic is moving up from the oversold region with a slight bullish divergence in play. This suggests that the pair could recover from its recent losses at least until another round of major reports are released.

Switzerland will be printing its CPI and retail sales data within the week. Inflation is expected to rise by 0.3% in March while consumer spending could post a 2.9% increase, much higher than the previous 1.9% rise. Take note that the FOMC minutes are also set for release this week and this could reaffirm the Fed’s bias against withdrawing stimulus.

Shorting at .9400 with a stop above the 50% or 61.8% Fibonacci levels and a target of new lows would be a good weekly trade.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 9, 2013)

USD

There were no major reports released from the U.S. yesterday, allowing the Greenback to recover from some of its recent losses. There are no reports due from the U.S. once more, which suggests possible quiet trading for the New York session. Do keep close tabs on Q1 earnings reports though as this could affect U.S. equities and overall market sentiment. Take note that fundamentals have been driving the dollar lately and that weak earnings reports could put the dollar back on its downtrend.

EUR

Minor euro zone reports came in mixed during yesterday’s trading as the Sentix investor confidence figure fell below consensus while the German industrial production report in strong. Investor confidence dipped from -10.6 to -17.3 in April, reflecting increased pessimism in the euro zone region. Meanwhile, Germany’s industrial production rose by 0.5% in February while the previous month’s figure suffered a downward revision from 0.0% to -0.6%. There are no major reports due from the euro zone today.

GBP

The pound retraced from its recent gains against the U.S. dollar on Monday as the 1.5350 minor psychological level acted as resistance for the pair. Today’s U.K. data could push GBP/USD back on an uptrend if the actual figures come in strong. The manufacturing production report could show a 0.4% rebound from the 1.5% drop seen before while the trade deficit is expected to widen from 8.2 billion GBP to 8.7 billion GBP.

CHF

USD/CHF stayed mostly in consolidation during yesterday’s trading sessions as the pair was able to keep its head below the .9400 handle. Today’s Swiss reports could determine whether the pair will bounce back up .9400 or head further south. Switzerland will print its monthly CPI figure and possibly show another 0.3% uptick and will also release its latest retail sales report, which is expected to jump by 2.9% on a year-to-year basis.

JPY

Once again, the Japanese yen continues to lose ground against its major counterparts as the BOJ’s aggressive easing measures will have a long-term effect on their currency. Analysts are saying that USD/JPY could reach 100.00 as early as this week, with a potential target of 110.00 in the longer-term. Only the monetary policy meeting minutes were released from Japan today and this didn’t have such a huge impact on yen action as the selloff remains underway.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies appear poised to test significant inflection points as AUD/USD is on its way back to 1.0500 while NZD/USD is testing .8500. Earlier today, New Zealand printed an improvement in its NZIER business confidence as the figure climbed from 20 to 23 in the first quarter of the year. Chinese CPI is due later today and would probably result in a quick selloff if the actual figure comes in below 2.5%, which is already lower than the previous 3.2% reading. Keep an eye out for the release of Canadian building permits and housing starts during the New York session as this could determine whether USD/CAD will stay on its downtrend or not.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 10, 2013)

USD

The U.S. dollar continued to suffer losses against most of its major counterparts, except for the Japanese yen, as the weak March NFP figure dashed hopes of earlier than expected monetary policy tightening from the Federal Reserve. There were no major market-moving releases from the U.S. yesterday but some minor reports did highlight the ongoing slowdown. The NFIB small business index revealed that activity slowed down in March as the reading fell from 90.8 to 89.5. Today, the U.S. will release the minutes of the latest FOMC meeting but these aren’t likely to have a material impact on price action as the meeting was conducted prior to the dismal NFP release. Also due today are the Federal budget balance and the crude oil inventories.

EUR

The euro rallied against both the U.S. dollar and the Japanese yen in yesterday’s trading, despite the lack of top-tier data from the euro zone. German trade balance came in stronger than expected while the French trade balance missed expectations. For today, France and Italy will print their industrial production data and stronger than expected figures could provide support for the euro.

GBP

Data from the U.K. came in mixed yesterday as the manufacturing and industrial production figures both exceeded the consensus while the trade balance came in worse than expected. Manufacturing is up by 0.8%, twice the estimated 0.4% growth, while industrial production grew by 1.0%. The trade deficit widened from 8.2 billion GBP to 9.4 billion GBP, larger than the estimated 8.7 billion GBP shortfall. There are no reports due from the U.K. today which suggests quiet trading among pound pairs unless there’s a significant change in market sentiment.

CHF

Swiss data came in weaker than expected yesterday as the CPI and retail sales figures both missed forecasts. The Swiss CPI posted a 0.2% uptick, lower than the projected 0.3% increase and the previous month’s 0.3% rise, while retail sales grew by 2.4% and not the 2.9% jump that was expected. There are no reports on Switzerland’s schedule for today as USD/CHF and EUR/CHF may stay in consolidation.

JPY

Yen bears seem to have run out of steam as most yen pairs consolidated around significant inflection points yesterday. However, bias for the yen is still very bearish as the BOJ’s decision to implement aggressive easing measures is likely to have a long-term effect on yen pairs. There are no major reports on the yen’s schedule for today but do keep an eye out for the next set of reports due in tomorrow’s early Asian session. Core machinery orders and M2 money stock figures are up for release then.

Commodity Currencies (AUD, CAD, NZD)

Weaker than expected data from China might weigh on the Australian dollar in the near term as China printed weak CPI and trade balance. Annual inflation is at 2.1%, lower than the estimated 2.5% increase and the previous 3.2% reading. The trade balance posted a surprise deficit of 0.9 billion USD instead of the expected 15.2 billion USD surplus. Meanwhile, Canadian housing data came in mixed with housing starts rising more than expected and building permits coming in short. New Zealand will be releasing its Business NZ manufacturing index in tomorrow’s Asian session so watch out for NZD/USD action around then.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 11, 2013)

USD

The U.S. dollar had quite a topsy-turvy ride at the start of the U.S. session when the FOMC meeting minutes were suddenly released early. However, price action soon settled down when the minutes revealed nothing special in particular. Fed officials still remained divided on the issue of tapering off asset purchases as many believe that the U.S. is still on shaky ground. On top of that, most traders disregarded the report as the remarks were made prior to the dismal March NFP release. For today, only the initial jobless claims report is due from the U.S. economy and the figure is projected to come in at 362K, lower than the previous week’s 385K.

EUR

The euro let go of some of its recent gains against the U.S. dollar as the 1.3100 major psychological level held as resistance in yesterday’s trading. Euro zone data came in mixed with French industrial production coming in strong and Italian industrial production posting a weaker than expected reading. Only minor reports are on tap from the euro zone again today as the ECB monthly bulletin might be the most relevant report for the day.

GBP

The pound fought to stay above the 1.5300 handle against the U.S. dollar despite the lack of market-moving reports yesterday. For today, the U.K. schedule is still empty, which suggests we could see more consolidation for GBP/USD.

CHF

Just like its other European counterparts, the Swissy had an empty economic schedule yesterday which kept USD/CHF and EUR/CHF stuck in their respective ranges. There are no reports due from Switzerland again today which suggests we could see more sideways movement from franc pairs.

JPY

After a few moments of consolidation, the Japanese yen resumed selling off against its major counterparts, particularly after the FOMC meeting minutes were released. Japanese core machinery orders came in stronger than expected as it showed a 7.5% increase, but this wasn’t enough to support the Japanese yen. There are no other reports due from Japan for the rest of today’s trading sessions, leaving yen pairs to rally on the BOJ’s recent easing efforts.

Commodity Currencies (AUD, CAD, NZD)

The Australian dollar sold off a few hours into the Asian session when Australia printed a very weak jobs report. Hiring is down by 36.1K, worse than the estimated 6.7K drop, bringing the jobless rate up from 5.4% to 5.6% for March. However, Chinese new loans and M2 money supply came in strong, providing some support for the commodity currencies. No other reports are due from Australia, Canada, and New Zealand for the rest of the day, which suggests quiet trading for the comdolls today.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 12, 2013)

USD

The U.S. dollar could be in for another sharp selloff during today’s U.S. session as the retail sales report is set for release. Remember that the jobs data for March came in significantly weaker than expected at 88K versus the projected 198K reading, which suggests that consumer spending could also disappoint. March retail sales are projected to stay flat while the core figure could show a 0.1% downtick, lower than the previous month’s 1.0% increase. Also due during today’s New York session is the preliminary consumer sentiment report from the University of Michigan, which is also expected to show a slight decline.

EUR

The euro continued to gain against the U.S. dollar in yesterday’s trading as dollar weakness propped the shared currency higher. Only minor reports, namely the German WPI and euro zone industrial production, are due from the region today and these aren’t likely to have a material impact on euro movement.

GBP

The pound packed on more gains against the Greenback, with GBP/USD climbing to the 1.5400 major psychological level. There were no major reports released from the U.K. recently and none are due today, suggesting that pound pairs could continue to take advantage of dollar and yen weakness.

CHF

USD/CHF suffered another strong selloff, this time to the 0.9280 levels, as dollar weakness ensued. There were no reports released from Switzerland then and none are due today, which means that USD/CHF could react solely to the U.S. retail sales in the New York session.

JPY

The Japanese yen fought to hold on to its current levels against its major counterparts as the tertiary industry activity index provided a bit of support. The figure posted a 1.1% increase for February, better than the estimated 0.8% uptick. USD/JPY is stalling at the 99.50 area during the Asian session but we could see more action once the U.S. retail sales are printed.

Commodity Currencies (AUD, CAD, NZD)

The comdolls had a strong start during yesterday’s Asian sessions as traders sought to take advantage of the carry opportunities between the higher-yielding commodity currencies and the lower-yielding yen and dollar. However, these gains were reversed later on as traders took profits off significant inflection points. There are no major releases from their economies later today as comdoll pairs could be affected heavily by the U.S. retail sales release.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 15, 2013)

USD

As expected, the U.S. retail sales data printed bleak figures and triggered a dollar selloff. The headline figure showed a 0.4% decline instead of the flat reading expected while the core figure also printed a 0.4% drop, worse than the estimated 0.1% decrease. On top of that, the consumer sentiment figure measured by the University of Michigan printed a downturn in confidence as the actual figure slipped from 78.6 to 72.3 in April. Producer price inflation reports from the U.S. also missed expectations. Only the Empire State manufacturing index is due from the U.S. today and another round of weak figures could push the dollar lower. The reading is expected to dip from 9.2 to 7.2 in April, reflecting a slowdown in manufacturing.

EUR

Cyprus is currently undergoing additional challenges with its bailout package as a recently released debt sustainability report showed that the country needs to find an additional 6 billion EUR to weather the potential effects of the ongoing fiscal tightening on economic growth. With no other report due on the euro zone schedule today, markets could stay focused on the updates on Cyprus’ debt situation and possibly sell the euro off if the country shows little to no progress in securing additional funds. The EU and IMF have already said that they’re not willing to provide extra cash, which means that Cyprus is running out of options.

GBP

The U.K. economic calendar is empty for today as pound traders could brace themselves for the release of British claimant count change data and retail sales later on. At the moment, the pound is benefitting from dollar and yen weakness but fundamentals in the U.K. remain very weak and this could be reflected by this week’s set of economic data.

CHF

There was hardly any movement from franc pairs lately as USD/CHF and EUR/CHF have simply been reacting to U.S. and euro zone reports. There are no reports on Switzerland’s schedule for today, which suggests quiet trading for these pairs.

JPY

The Japanese yen has managed to recover some of its previous losses against its major counterparts as the Japanese economy has shown signs of improvement last week. Core machinery orders and tertiary industry activity index have both surprised to the upside and contributed to yen support. The industrial production report also surprised to the upside and boosted the yen in today’s Asian session. Japan is set to print a few more medium-tier reports within the week and more improvements could keep the yen selloff at bay.

Commodity Currencies (AUD, CAD, NZD)

Weak Chinese data have been weighing on the commodity currencies recently as China’s CPI and trade balance have disappointed last week. Earlier today, the Chinese GDP also came in below the consensus, which inspired a massive Aussie selloff. No reports are due from the comdoll economies today, which suggests that the worse than expected Chinese figures could keep their rallies capped.

By Kate Curtis from Trader's Way

 

[katetrades]

Forex Major Currencies Outlook (April 16, 2013)

USD

The U.S. dollar regained ground against most of its counterparts on Monday even though they printed weak economic data. The Empire State manufacturing index fell from 9.2 to 3.1 this month, worse than the estimated 7.2 reading, while the TIC long-term purchases report showed a surprise negative reading of -17.8 billion USD instead of the expected growth from 25.7 billion USD to 41.3 billion USD. Lastly, the NAHB housing market index also disappointed as it dropped from 44 to 42 instead of rising to 45. The U.S. is scheduled to print building permits and housing starts, along with CPI data, during today’s U.S. session. Also on tap are the industrial production and capacity utilization numbers. It is unclear if it’s still fundamentals or risk sentiment that’s driving price action these days but the odds are that weaker than expected U.S. figures might drag the dollar lower again.

EUR

Only the euro zone trade balance was printed from the 17-nation bloc yesterday and the report came in stronger than expected with a 12.0 billion EUR surplus instead of the projected 9.9 billion EUR reading. This was enough to boost the euro in yesterday’s trading but today’s reports might erase those gains if the actual figures disappoint. Germany will print its ZEW economic expectations figure, which is slated to drop from 48.5 to 41.5 in April. Euro zone CPI is also on tap for today but this isn’t likely to have a huge impact on euro price action as no changes are expected from the headline figure of 1.7% and the core figure of 1.3%. Keep close tabs on the debt and bailout situation in Cyprus as positive developments could provide support for the euro.

GBP

The pound lost ground to the yen and dollar in yesterday’s trading despite the lack of data from the United Kingdom. For today only the CPI reports are due from the U.K. and this should provide an indication of whether the BOE has room to ease further or not. If the actual figure comes in below or beyond the government’s target, which is unlikely, the BOE will have to submit an inflation letter to the Chancellor explaining why. Weaker than expected data could still trigger a pound selloff though.

CHF

No major reports due from Switzerland today as USD/CHF and EUR/CHF remain stuck in tight ranges. U.S. reports or euro zone updates could move these pairs a little more though but unless we see significantly worse or better data, these pairs could be in consolidation for a longer while.

JPY

The Japanese yen rallied against its counterparts on Monday as risk aversion popped back in the markets and traders started liquidating their recent yen shorts. USD/JPY eased back to the 96.00 area before rebounding but it remains to be seen whether the bounce would last or not. There are no major reports due from Japan for the rest of the day.

Commodity Currencies (AUD, CAD, NZD)

Commodity currencies continued to selloff on Monday as risk aversion started to take its toll on the higher-yielding assets. On top of that, prices of precious metals have slumped, with gold falling to its two-year lows. Canada will release manufacturing sales and foreign securities purchases data in today’s New York session, as worse than expected data might trigger a Loonie selloff. No other reports are due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader's Way