Forex Major Currencies Outlook (August 30, 2013)

The GDP reading for the second quarter of the year was revised up from 1.7% to 2.5%, higher than the estimate at 2.2%. This was enough to prompt traders into believing that the Septaper is a go. Meanwhile, tensions in Syria seem to have a limited impact on currency behavior recently, although the possibility of a military strike is still present. Medium-tier US data such as core PCE price index, personal spending and income, and revised UoM consumer sentiment reports are on tap. 

EUR

The euro lost a lot of ground to the dollar in yesterday’s trading but managed to consolidate against the yen. German data was weaker than expected, as CPI remained flat instead of jumping by 0.2% while joblessness increased by 7K instead of dropping by 5K. This was enough to erase the jobs gains seen in the previous month, hinting that Germany could be in for weaker growth prospects. German retail sales figures are due today and a rebound is eyed, although a downside surprise could result from the recent decline in hiring.

GBP

The pound was also one of the weaker currencies in yesterday’s trading as there were no major reports to support it. Earlier today, the GfK consumer confidence figure turned out better than expected and improved from -16 to -13. More medium-tier releases are due from the UK today, such as the Nationwide HPI, net lending to individuals, and mortgage approvals. 

CHF

The franc was still victim of dollar strength in yesterday’s trading but it managed to recover some of its recent losses against the euro. Switzerland’s employment level was better than expected as it improved from 4.15M to 4.17M instead of dipping to 4.14M. Switzerland will release its KOF economic barometer later today and possibly show an improvement from 1.23 to 1.34. 

JPY

The yen was mostly stuck in consolidation against its counterparts, as EUR/JPY consolidated above 130.00 while USD/JPY formed a symmetrical triangle. This was perhaps because traders were awaiting this day’s set of data, which came in mixed. Manufacturing PMI improved from 50.7 to 52.2 while household spending fell short at 0.1% instead of the estimate at 0.4%. CPI figures on the national and Tokyo level were improvements over previous ones, suggesting that the BOJ’s recent easing efforts are still working. 

Commodity Currencies (AUD, CAD, NZD)

The comdolls were still no match to dollar strength yesterday, as risk aversion and strong US GDP made the Greenback nearly invincible. However, data from Australia and Canada still came in better than expected. Australian private capital expenditure rose by 4.0% while Canada reported a smaller than expected current account deficit. Canadian monthly GDP is on tap for today and a drop of 0.4% in growth is expected for June, following the previous 0.2% expansion. 

By Kate Curtis from Trader's Way