Forex Major Currencies Outlook (December 10, 2013)

Remarks from Fed officials were also mixed since Bullard hinted at a small taper because of the strong increases in hiring while Fisher reiterated that interest rates will remain low even after the bond buying program ends. There were no major reports released from the US economy then and today has none lined up as well.

EUR

The euro continued to edge higher against the dollar and the yen, despite German Chancellor Angela Merkel’s downbeat remarks. German trade balance came in weaker than expected at 16.8 billion EUR versus the estimate at 1.4 billion EUR. French and Italian industrial production figures are due today but these might not have such a huge effect on the euro. What could spark additional volatility is Draghi’s speech in today’s London session.

GBP

The pound rebounded against the dollar and kept rallying against the Japanese yen even though there were no major reports released from the UK yesterday. BOE Governor Carney’s speech did not contain a lot of details on monetary policy but his tone was upbeat, helping the pound recover from its recent selloff. Earlier today, the RICS house price balance came in weaker than expected but was not enough to erase the pound’s gains. Manufacturing production and trade balance are up for release today and small improvements could allow the pound to sustain its climb.

CHF

Despite weaker than expected Swiss retail sales, the franc managed to continue its rallies against the dollar and other currency rivals. Retail sales showed a 1.2% increase instead of the projected 1.7% jump. EUR/CHF is treading close to the SNB floor at 1.2000 and might be due for a bounce if the central bank decides to jawbone again.

JPY

The yen was beaten up by its currency rivals as Japan printed weaker than expected economic data. Tertiary industry printed a surprise 0.7% decline instead of the estimated 0.3% uptick while the BSI manufacturing index also disappointed. Up ahead, Japanese consumer confidence and preliminary machine tool orders data are due and might continue to affect yen pairs’ movement throughout the trading day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls tried to edge higher against its counterparts, and the Aussie and Kiwi enjoyed more success than the Loonie. Data from China came in line with expectations, providing support for the Aussie, as the CPI chalked up a 3.0% figure. Earlier today, Australian NAB business confidence showed a decline from 6 to 5 but Chinese data might have a bigger impact on the Australian dollar. Industrial production, fixed asset investment, and retail sales data from China are on today’s docket.

By Kate Curtis from Trader's Way