Forex Major Currencies Outlook (February 13, 2014)

The Federal budget balance came in better than expected at a deficit of 10.3 billion USD instead of the estimated 16.4 billion USD shortfall. US retail sales data are up for release today, with the core figure projected to show a 0.1% uptick and the headline figure to print a flat reading. Weaker than expected results might be in the cards since hiring has been weak in the past couple of months.

EUR

The euro suffered heavy selling pressure in recent trading because of remarks from an ECB official saying that the central bank is considering implementing negative deposit rates. Draghi’s speech did not have much of an impact on price action since he simply reiterated his previous remarks. Euro zone industrial production came in below consensus and printed a 0.7% decline instead of the projected 0.2% dip. German final CPI and the ECB monthly bulletin are up for release today, but these aren’t expected to have a huge impact on the euro.

GBP
The pound enjoyed a strong rally against its currency rivals in recent trading, after BOE Governor Carney announced upgrades in its growth forecasts. He upgraded the GDP forecast for the year from 2.8% to 3.4%, pushing GBP/USD back above the 1.6600 mark. Although the RICS house price balance came in weaker than expected at 53% versus the estimated 56% reading, this wasn’t enough to erase the pound’s gains. No reports are due from the UK today.

CHF
The franc struggled to hold its ground to the dollar in recent trading, as Swiss CPI printed a 0.3% decline following the previous 0.2% dip. Deflation remains a concern in the Swiss economy, making it difficult for the franc to extend its rallies. Swiss PPI is up for release today and might be indicative of future inflation prospects. After printing a flat reading in the previous release, a 0.1% dip is expected.

JPY

The yen regained a bit of ground on the heels of risk aversion in the markets, after Janet Yellen recently confirmed that the Fed would push through with its taper and won’t bother with the potential crash in emerging markets. There have been no major releases from the Japanese economy so far and none are due today, which suggests that yen pairs could be swayed by risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar got sold off heavily in today’s Asian trading session because of weak Australian jobs data. The employment change figure showed a 3.7K decline following the previous month’s 23K drop. This was enough to push the jobless rate up from 5.8% to 6.0%, taking AUD/USD below the .9000 mark and AUD/JPY below 92.00. No other reports are lined up from the comdoll economies but the downturn in risk appetite might keep weighing on the rest of the comdoll pairs for the rest of the day.

By Kate Curtis from Trader's Way