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Daily Market Outlook by Kate Curtis from Trader's Way

Forex Analysis by Kate Curtis of Trader's Way . Kate Curtis updates the outlook and analysis daily in this sub-forum.
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Forex Major Currencies Outlook (Jan 03, 2018)

Postby katetrades » Wed Jan 03, 2018 8:58 am

USD

The dollar was off to a shaky start as it simply picked up where it left off in 2017. Equities recorded a strong performance in anticipation of tax reform implementation, but the currency was more sensitive to policy biases and a fresh round of jitters from North Korea. The ISM manufacturing PMI is due today and analysts are expecting to see a dip from 58.2 to 58.1 to reflect a slower pace of expansion. Also due today are the FOMC meeting minutes for December, which might contain more insight on how the central bank could adjust policy in the year ahead.

EUR

The euro was able to sustain its lead on the heels of upbeat remarks from ECB member Coeure. Data was actually mostly weaker than expected as services PMI from the top economies fell short. Today has the Spanish unemployment change due and a 58.7K drop in joblessness is eyed. Germany is also set to print its jobs data and probably show a 13K decrease in unemployment.

GBP

The pound was also one of the best performers of the day, despite weaker than expected UK manufacturing PMI. The reading fell from 58.2 to 56.3 versus the estimated dip to 58.0 but it was the upbeat assessment of Markit that saved the day. Construction PMI is due today and a fall from 53.1 to 52.8 is expected.

CHF

The franc had a mixed run as it mostly reacted to currency-specific factors. Swiss banks were still closed for the holiday yesterday and will reopen today. The manufacturing PMI is due and a fall from 65.1 to 64.6 is eyed, reflecting a slower pace of industry expansion. 

JPY

The yen took advantage of dollar weakness to chalk up a few more gains across the board. Traders also seem to be warming up to the idea that the BOJ might taper its QQE program later this year as well. Japanese banks are still closed for the holiday so there are no releases scheduled.

Commodity Currencies (AUD, NZD, CAD)

It was a rally and reverse day for the comdolls as they got hit by risk aversion in the earlier sessions then staged a bit of a rebound during the US hours. New Zealand reported a 2.2% rebound in dairy prices during the latest GDT auction while Canada had a stronger manufacturing PMI of 54.7 from the earlier 54.4 figure. China's Caixin manufacturing PMI also came in better than expected.

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Forex Major Currencies Outlook (Jan 04, 2018)

Postby katetrades » Thu Jan 04, 2018 8:34 am

USD

The dollar was able to chalk up a winning day even after its shaky start this week as the FOMC minutes turned out less downbeat than expected. Several members confirmed that gradual rate hikes are in the cards, although many remained concerned about weaker inflation. Policymakers also suggested that strong jobs data could lift wages and price levels. The ISM manufacturing PMI turned out stronger than expected at 59.7, with an uptick in the prices component and a dip in the jobs figure. The ADP data is due next and a 191K increase in hiring is eyed, slightly higher than the earlier 190K gain.

EUR

The euro also took some hits as bond yields turned lower in anticipation of MiFID II. Data was stronger than expected, with both Germany and Spain printing better than expected jobs figures. Today has the final services PMIs from the top economies and positive revisions could be bullish for the shared currency.

GBP

The pound lost a bit of ground when the construction PMI also turned out weaker than expected. The reading fell from 53.1 to 52.2 instead of improving to 52.8. The services PMI is due today and an improvement from 53.8 to 54.1 is eyed. Net lending to individuals and mortgage approvals data are also lined up.

CHF

The franc was one of the weaker performers during the day as risk-taking during the latter trading sessions weighed on the currency. Swiss manufacturing PMI was actually better than expected as the reading ticked up from 65.1 to 65.2 instead of falling to 64.6. There are no reports due from the Swiss economy today so market sentiment could drive franc action.

JPY

The yen was off to a good start during the Asian and London sessions but wound up returning most of its gains to the dollar later on. Bond yields favored the US currency and led to a weaker yen as risk-taking continued. Japan's final manufacturing PMI was downgraded from 54.2 to 54.0.

Commodity Currencies (AUD, NZD, CAD)

The Aussie was one of the strongest performers of the day while its peers followed closely behind. Crude oil staged another rally on another day of unrest in Iran and a larger than expected draw in API stockpiles. China reported a gain in its Caixin services PMI from 51.9 to 53.9 versus the 51.8 consensus. EIA crude oil inventories and Canada's underlying inflation figures are due.

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Forex Major Currencies Outlook (Jan 05, 2018)

Postby katetrades » Fri Jan 05, 2018 4:55 am

USD

The dollar barely drew any support from upbeat leading jobs indicators. The Challenger job cuts report printed a 3.6% drop in layoffs, bringing the annual total of job cuts down to its lowest level since 1990. The ADP reading also beat expectations with a 250K gain versus the 191K figure, but the earlier reading was downgraded from 190K to 185K. The NFP report is due today and analysts expect an increase of 190K, slower than the earlier 228K gain.

EUR

The euro continued to advance against most of its peers on the heels of hawkish ECB rhetoric earlier in the week and a couple of upside surprises in medium-tier data. German retail sales, French preliminary CPI, and the region's flash CPI readings are up for release today. Another round of upbeat results could continue to stoke expectations of ECB rate hikes later this year, following their taper plans this month.

GBP

The pound wasn't too far behind as the UK currency was able to benefit from better than expected services PMI. The reading rose from 53.8 to 54.2, a notch higher than the 54.1 consensus. There are no major reports due from the UK today.

CHF

The franc was mostly weaker against its higher-yielding peers as risk-taking was in play. There were no reports out of the Swiss economy in the latest sessions and there are no reports due today, which suggests that franc pairs could keep moving in line with market sentiment or currency-specific factors.

JPY

The yen was also one of the weaker performers as risk-taking took its toll on the lower-yielding currency. Japan's final manufacturing PMI was downgraded from 54.2 to 54.0 to indicate a slower pace of industry growth. There are no reports due from Japan today, so the yen could be more sensitive to bond yields and dollar price action.

Commodity Currencies (AUD, NZD, CAD)

The Loonie got a boost from better than expected underlying inflation figures from Canada. Both the RMPI and IPPI posted strong upside surprises, signaling positive inflationary pressures down the line and shoring up BOC hike hopes. Earlier today, Australia printed a weaker than expected trade balance with a surprise deficit of 0.63 billion AUD instead of the estimated 0.55 billion AUD surplus.

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Forex Major Currencies Outlook (Jan 09, 2018)

Postby katetrades » Tue Jan 09, 2018 9:11 am

USD

The dollar managed to rebound against most of its peers during the US session after a weak start earlier in the day. The S&P and Nasdaq continued their push for another round of record highs but the Dow closed in the red. FOMC members Bostic and Williams shared their views on the economy and warned of potentially weaker inflation weighing on rate hike prospects. Credit card spending leading up to the Thanksgiving holidays buoyed debt up from $20.5 billion to $28 billion in November while auto and student loans also ticked higher. Only medium-tier reports such as the NFIB Small Business index and JOLTS job openings data are due from the US today.

EUR

The euro returned most of its recent gains as traders worried about more words of caution in the ECB minutes due later in the week. Recall that the central bank upgraded their growth forecasts then but the announcement was seen as less hawkish than expected since it didn't contain much rate hike clues. Data from the region was actually stronger than expected, with retail sales up 1.5% versus 1.4% and the Sentix investor confidence up from 31.1 to 32.9 versus the consensus at 31.5.

GBP

The pound was able to hold its ground as the UK government started its cabinet reshuffle to strengthen its Brexit position. The Halifax HPI was weaker than expected with a 0.6% drop in prices versus the estimated 0.2% uptick while the BRC retail sales monitor posted another 0.6% gain. There are no other major reports from the UK today.

CHF

The franc weakened to most of its peers as risk-taking was in play during the latter trading sessions. Swiss CPI came in flat instead of posting the estimated 0.1% dip. Swiss jobless rate, foreign currency reserves, and retail sales are all due today and strong readings could also spur tightening expectations from the SNB.

JPY

The yen was in a weak spot as risk-taking came into play during the latter trading sessions. Japanese average cash earnings turned out stronger than expected with a 0.9% gain versus the projected 0.6% increase but the earlier figure was downgraded. The Japanese consumer confidence index is due next and a rise from 44.9 to 45.1 is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the strongest of the bunch as it enjoyed a strong boost from the BOC Business Outlook Survey. Policymakers projected more sales activity but with some moderation, also highlighting the pickup in hiring and price levels. Australia's building approvals also beat expectations with a 11.7% gain versus the estimated 0.9% drop. Canadian housing starts data is due next.

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Forex Major Currencies Outlook (Jan 10, 2018)

Postby katetrades » Wed Jan 10, 2018 8:25 am

USD

The dollar gave up ground as the yen advanced sharply in the earlier trading sessions, but the US currency was able to rebound as Treasuries hit record highs. Equities also continued their ascent in anticipation of a positive earnings season kicking off on Friday. US JOLTS job openings and NFIB Small Business Index both disappointed while import prices and final wholesale inventories data are due next.

EUR

The euro was able to hold its ground thanks to upbeat medium-tier data. German industrial production rose 3.4% versus the estimated 1.9% gain while their trade balance printed a larger surplus of 22.3 billion EUR versus the estimated 20.7 billion EUR and the earlier 19.7 billion EUR. French trade balance came in weaker than expected, though. French industrial production is due next, along with the German 10-year bond auction.

GBP

The pound struggled to stay afloat on the lack of major reports from the UK and fading sentiment from the cabinet reshuffle. Today's UK manufacturing production report could change that as analysts predict a stronger 0.3% increase compared to the earlier 0.1% uptick. The goods trade balance is also due and a larger deficit of 10.9 billion GBP from the earlier 10.8 billion GBP is eyed.

CHF

The franc continued to slide against most of its peers as data came in mixed. The unemployment rate held steady at 3.0% as expected but the earlier reading was negatively revised. Retail sales posted a better than expected 0.2% dip instead of the estimated 2.5% fall while foreign currency reserves ticked slightly higher from 738B CHF to 744B CHF. There are no other reports due from the Swiss economy today.

JPY

The yen was the start of the forex show as it jumped across the board when the BOJ reduced its JGB purchases. This revived taper hopes after officials hinted at exiting their aggressive stimulus program late last year. Data from Japan came in mixed, with average cash earnings up 0.9% versus the estimated 0.6% uptick and the consumer confidence figure slipping from 44.9 to 44.7 instead of improving to 45.1.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to score some wins against a few of their rivals but the rallies were limited as gold was weighed down by risk-taking and the Loonie didn't join in the crude oil rally. Canadian housing starts turned out weaker than expected while China's CPI fell short of estimates at 1.8% versus 1.9%. PPI was slightly better than expected at 4.9% versus 4.8% but still lower than the earlier 5.8% gain. EIA crude oil inventories are due next.

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Forex Major Currencies Outlook (Jan 11, 2018)

Postby katetrades » Thu Jan 11, 2018 5:52 am

USD

The dollar was in a bit of a weak spot due to reports that China plans on trimming its Treasury holdings. US equities also capped off their positive streak as fresh concerns on NAFTA emerged and medium-tier reports such as import prices and wholesale inventories disappointed. Initial jobless claims and PPI figures are due today, providing clues on how Friday's CPI readings might turn out.

EUR

The euro was mostly weaker after France reported a larger 0.5% drop in industrial production versus the estimated 0.4% dip. There were no other reports to support the shared currency then, so it was dragged down by weaker European equities. Italian retail sales and the region's industrial production numbers are lined up today, but the ECB minutes could be a bigger catalyst for euro action.

GBP

The pound had a mixed run as it appeared to react to currency-specific factors. UK manufacturing production was slightly better than expected at 0.4% versus 0.3% while industrial production came in line with expectations. The goods trade balance had a wider deficit of 12.2 billion GBP versus the expected 10.9 billion GBP shortfall while the earlier figure was downgraded.

CHF

The franc was able to take advantage of the risk-off vibes stemming from reports that China could trim its holdings of US bonds. There were no reports out of Switzerland and none are due today, so market sentiment could keep pushing franc pairs around.

JPY

The yen was the main beneficiary of risk-off flows after China hinted that it could reduce its holdings of US Treasuries. This comes after the BOJ's reduction of JGB purchases, which many interpreted as a taper signal. Japanese leading indicators is due next and an improvement is eyed.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was the weakest of the bunch as Canadian government officials worried that Trump could pull the US out of NAFTA in the next round of talks. Canadian building permits also disappointed with a 7.7% slide versus the estimated 0.7% drop. Australia reported stronger than expected retail sales growth of 1.2% versus the estimated 0.4% uptick.

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Forex Major Currencies Outlook (Jan 12, 2018)

Postby katetrades » Fri Jan 12, 2018 8:34 am

USD

The US dollar was dragged lower by downbeat PPI data, as both headline and core readings posted 0.1% declines instead of the estimated 0.2% gains. This could mean a weaker CPI for the same month, which would reinforce lower inflation expectations and rate hike odds. Headline CPI could show a 0.1% uptick while the core reading could be up by 0.2%. Retail sales data is also due today and stronger spending figures are eyed.

EUR

The euro got a strong boost from the ECB minutes as policymakers dropped more tightening hints. In particular, the minutes suggested a change in forward guidance shared by members of the committee and a shift in their inflation outlook on expectations that price pressures would eventually take hold. Italian retail sales and euro zone industrial production also beat expectations. French final CPI and Italian industrial production numbers are due next.

GBP

The pound had a mixed round as it advanced to the dollar but slid to the euro and consolidated against most of its peers. There were no major reports out of the UK economy yesterday while today has none on tap as well.

CHF

The franc trailed the euro after the release of the ECB minutes as the odds of tightening in the region meant less need for the SNB to keep the franc weak. Also, a higher EUR/CHF exchange rate would likely be positive for trade and inflation in Switzerland. There were no reports out of the Swiss economy yesterday and none are due today.

JPY

The yen gave up ground on risk-taking but managed to outpace the dollar. Japan's leading indicators ticked up from 106.5% to 108.6% but the current account surplus fell short of estimates. The Economy Watchers Sentiment index is due next and an uptick from 55.1 to 55.2 is expected.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi was one of the bigger winners of the day as risk-taking kicked in. The Aussie lagged behind as weaker gold prices came into play while the Loonie failed to follow the oil price rallies on NAFTA concerns. China's trade balance turned out stronger than expected, lifting the Aussie and Kiwi on stronger demand expectations.

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Forex Major Currencies Outlook (Jan 16, 2018)

Postby katetrades » Tue Jan 16, 2018 6:34 am

USD

The dollar was down in the dumps as banks were closed on a holiday and the usual stock market rallies weren't there to buoy the currency higher. Only the Empire State manufacturing index is due today and a gain from 18.0 to 18.5 is expected. Stronger than expected results, combined with positive earnings data, could lead to a pickup for the dollar.

EUR

The euro was one of the top performers in recent sessions thanks to hawkish commentary from ECB official Hansson. He hinted that the central bank could end bond purchases in September and that currency appreciation won't hurt their inflation outlook. The region's trade balance also came in better than expected while medium-tier reports like German final CPI and Italian trade balance are lined up today.

GBP

The pound also scored decent gains and shrugged off dovish remarks from a BOE official, as well as the collapse of Carillion. There were no major reports out of the UK then while today has inflation numbers due. Headline CPI could dip from 3.1% to 3.0% while the core reading could fall from 2.6% to 2.7%, probably weighing on tightening hopes.

CHF

The franc was also one of the stronger currencies as it trailed the euro and took advantage of dollar weakness. There were no major reports out of Switzerland then while today has a speech by SNB head Jordan. Any hint of potential intervention could keep a lid on franc gains.

JPY

The yen was able to advance against the dollar but gave up ground to most of its peers. BOJ Governor Kuroda reiterated their pledge to conduct easing but bulls seem unconvinced since the central bank reduced its JGB purchases recently. Tertiary industry activity data is due next, then core machinery orders data is due tomorrow.

Commodity Currencies (AUD, NZD, CAD)

The Loonie also strengthened against most of its peers as some traders held out hopes for a BOC hike this week. Crude oil also kept advancing despite rising US output expectations. In Australia, new motor vehicle sales picked up by 4.5%. New Zealand has its GDT auction coming up.

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Forex Major Currencies Outlook (Jan 17, 2018)

Postby katetrades » Wed Jan 17, 2018 4:53 am

USD

The US dollar continued to tumble across the board on concerns about a potential government shutdown and weaker performance in energy stocks. The Empire State manufacturing index fell from 18.0 to 17.7 instead of improving to 18.5. Today has the industrial production and capacity utilization rates due. FOMC member Mester also has a speech lined up after the release of the Fed Beige Book.

EUR

The euro got hit by reports that German coalition talks once again failed but was able to regain ground when ECB members gave a few more hawkish remarks. The shared currency even shrugged off warnings that currency appreciation could dampen inflation. Final CPI readings are due next.

GBP

The pound was dragged slightly lower by downbeat CPI readings as the headline figure slumped from 3.1% to 3.0% as expected while the core CPI fell below expectations to 2.5%. RPI and HPI both beat expectations, though. There are no major reports due from the UK today but MPC member Saunders has a testimony lined up.

CHF

The franc was one of the top performers of the day as dollar weakness and a bit of risk-off vibes in the earlier sessions spurred demand. SNB head Jordan refrained from jawboning the currency in his latest speech as well. 

JPY

The yen also took a lot of risk-off flows form the dollar despite weaker than expected PPI data. Core machinery orders, on the other hand, beat expectations with a 5.7% jump instead of the estimated 1.3% slide. There are no other reports due from Japan so market sentiment could push yen pairs around.

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the weakest currencies as crude oil slumped from its record highs while traders took some long positions off ahead of the BOC decision. A 0.25% rate hike is eyed but policymakers could stress that they would be cautious about future tightening. In New Zealand, the dairy auction yielded a 4.9% gain in prices while Australia reported a 1.8% gain in its Westpac consumer sentiment index.

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