Forex Major Currencies Outlook (January 20, 2014)

The preliminary figure reported by University of Michigan came in at 80.4 instead of the estimate at 83.4. Building permits and housing starts came in line with expectations around 0.99M. Up ahead, there are no major reports due from the US since traders are on holiday. Bear in mind though that the lower liquidity could result to higher volatility.

EUR

The euro slid lower to the dollar and yen at the start of the week, as fundamentals in the euro zone appeared weaker. German PPI and German Buba monthly report are up for release today but these aren’t expected to have a huge impact on euro price action. Keep watch for any changes in market sentiment and a potential surge in volatility during the US session though.

GBP

The pound was unable to recover on Friday but got a quick boost early this week, as the Rightmove HPI showed a 1.0% increase. This was enough to erase half of the 1.9% decline seen in the previous month. There are no other major reports due from the UK today, leaving pound pairs sensitive to risk sentiment.

CHF

The franc lost further ground to the dollar last week and seems poised to keep losing this Monday, after SNB head Jordan reiterated that there’s no need to remove the EUR/CHF peg. There are no reports lined up from Switzerland today.

JPY

The yen continued to move to the tune of risk sentiment last week, gaining ground against the Australian dollar and other weak majors. Japan’s revised industrial production report is due today but no changes are expected from the initially reported 0.1% uptick. Keep tabs on the behavior of the Nikkei if you’re trading yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The comdolls showed signs of weakness towards the end of the week, as traders started pricing in bleak expectations for China’s GDP release. However, the Asian giant reported growth in line with consensus at 7.7%. This is slightly weaker than the 7.8% GDP figure in the previous quarter. No other reports are due from the comdoll economies today, as China’s GDP release could weigh on overall risk sentiment.

By Kate Curtis from Trader's Way