Forex Major Currencies Outlook (Aug 1, 2014)

Data from the US economy was mixed, as the initial jobless claims came in line with expectations, the Chicago PMI missed expectations, and the quarterly employment cost index showed stronger than expected gains. For today, the much-awaited non-farm payrolls report is up for release. The figure is slated to come in at 231K, weaker compared to the previous 288K gain, while the jobless rate is expected to hold steady at 6.1%. Stronger than expected figures could lead to more gains for the US dollar.

EUR

The euro made a small rebound in recent trading as data from the euro zone came in mostly stronger than expected. Germany’s retail sales report showed a 1.3% gain versus the estimated 1.1% increase. The unemployment change showed a 12K drop in joblessness, better than the estimated 5K decline. French consumer spending also came in higher than expected with a 0.9% gain versus the projected 0.3% increase. The headline CPI flash estimate dropped from 0.5% to 0.4% though while the core CPI flash estimate held steady at 0.8%. Spanish and Italian PMI are up for release today.

GBP

The pound continued to edge lower to most of its major counterparts, as medium-tier data from the UK came in weaker than expected. The GfK consumer confidence report showed a drop from 1 to -2 instead of improving to 2 while the Nationwide HPI marked a mere 0.1% uptick versus the estimated 0.6% increase, weaker than the previous 1.0% gain in house prices. UK manufacturing PMI is up for release today and it might show a decline from 57.5 to 57.1.

CHF

The franc gradually weakened in recent trading, as there were no reports to give it support. It failed to take advantage of the rebound in euro zone data, as it edged lower to the dollar. Swiss banks are on holiday today so franc pairs might be in for consolidation.

JPY

The yen paused from its selloff recently, even though Japan’s average cash earnings disappointed and the housing starts showed another decline. Average cash earnings showed a mere 0.4% increase instead of the estimated 0.7% gain while housing starts showed a 9.5% decline, although this was better than the estimated 11.2% drop. Earlier today, Japan’s final manufacturing PMI showed a drop from 50.8 to 50.5. BOJ Kuroda has a testimony scheduled for today and this might cause volatility among yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls suffered another wave of selling today as Chinese PMI failed to impress. The official manufacturing PMI improved from 51.0 to 51.7 just as expected while the HSBC final manufacturing PMI was downgraded from 52.0 to 51.7. Australia’s quarterly PPI turned out to be a disappointment as it marked a 0.1% decline instead of the projected 0.7% gain. Canada, on the other hand, printed a better than expected monthly GDP reading of 0.4%. No other reports are due from the comdoll economies for the rest of the day.

By Kate Curtis from Trader's Way