Forex Major Currencies Outlook (January 9, 2014)

In addition, the FOMC minutes showed that the Fed will proceed with a cautious taper as most policymakers acknowledged the latest improvements in hiring. However, some debated about lowering the unemployment target but others argued that this would simply confuse the markets. Only the initial jobless claims report is up for release today as the dollar might be in for quiet trading ahead of the NFP release.

EUR

The euro lost further ground to the dollar in yesterday’s trading, as the euro zone printed mixed economic reports. German trade balance was weaker than expected at a surplus of 17.8 billion EUR instead of the estimated 18.9 billion EUR. Italy’s monthly unemployment rate climbed from 12.5% to 12.7%, worse than the consensus at 12.6%. Meanwhile, euro zone retail sales jumped by 1.4% instead of the estimated 0.2% uptick while the jobless rate held steady at 12.1%.

GBP

The pound was the only currency that held strong against the dollar rally, despite the weaker than expected report released from the UK. The Halifax HPI came in at -0.6% versus the estimate at +0.6% while the previous figure was revised down to 0.9%. Up ahead we have the BOE interest rate decision and although no actual monetary policy changes are expected, market watchers are waiting to see if the UK central bank will have any change in rhetoric.

CHF

The franc lost further ground to the dollar, as USD/CHF solidified its break above the falling trend line on the daily time frame. More rallies could be in the cards for this pair, as there are no major reports lined up from Switzerland today.

JPY

The yen lost ground to its counterparts yesterday as risk appetite improved and the Nikkei posted a positive close for the day. There are no reports due from Japan today so watch out for market sentiment to drive yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The Canadian dollar continued its losing streak in yesterday’s trading, followed soon after by the Australian dollar. Inflation reports from China turned out weaker than expected with the CPI falling from 3.0% to 2.5% instead of the estimate at 2.7%. Building approvals in Australia was also weaker than expected but retail sales was slightly stronger. Canadian building permits is up for release later on and there are no reports due from New Zealand.

By Kate Curtis from Trader's Way