Forex Major Currencies Outlook (January 8, 2014)

This reflects stronger trade activity in the country. Up ahead we have the release of the ADP non-farm employment change data and the FOMC meeting minutes, both of which have a huge potential to rock dollar pairs in today’s US trading session. The jobs report could show a 199K rise in payrolls, lower than the previous 215K figure. Meanwhile, the FOMC minutes could reveal how many policymakers supported the December taper decision and whether another taper is likely or not.

EUR

The euro edged lower to the dollar in yesterday’s trading sessions, despite better than expected data from Germany. German retail sales rose by 1.5%, stronger than the estimated 0.5% uptick and better than the previous 0.8% decline. Unemployment fell by 15K, better than the estimated 1K decline and a considerable improvement from the previous 9K increase in joblessness. For today, German trade balance, Italian unemployment rate, German factory orders, euro zone retail sales and jobs data are up for release. Stronger than expected figures might trigger a bounce for euro pairs while weak data could push it lower.

GBP

The pound was stuck in consolidation for the past few trading hours since there were no major reports released from the UK economy. Today might be more of the same story, as only medium-tier reports are on tap. These are the BRC shop price index and the BOE credit conditions survey.

CHF

The franc continued to lose ground to the dollar since there were no reports from Switzerland to give it support. It could be in for another round of losses today since the calendar is still empty and the US might be able to churn out strong reports.

JPY

USD/JPY struggled to hold its ground in yesterday’s trading as it managed to bounce off the 104.00 major psychological level and rising trend line. There were no reports released from Japan then and none are due today, which suggests that US data and market sentiment might dictate movement for this pair.

Commodity Currencies (AUD, NZD, CAD)

There wasn’t much movement from the Aussie and Kiwi yesterday, but the Loonie suffered a sharp selloff because of a combination of weak data and downbeat remarks from BOC Governor Poloz. The central bank head spoke of disinflation concerns while the Ivey PMI and trade balance both fell short of expectations. There are no reports due from New Zealand, Australia, and Canada in the next few hours, which suggests that market sentiment and US reports could drive price action.

By Kate Curtis from Trader's Way