Forex Major Currencies Outlook (January 23, 2014)

There were no reports released from the US economy recently, which explains why the Greenback is simply reacting to currency-specific events. For today, US existing home sales and jobless claims data are up for release and these might not have such a pronounced impact on dollar movement.

EUR

The euro moved sideways to the dollar in yesterday’s trading since there were no major reports released from the euro zone. With euro pairs mostly in consolidation, traders are probably waiting for today’s set of data before taking any huge bets. French and German manufacturing and services PMI figures are up for release today and small improvements are expected. Stronger than expected figures might trigger an upside break for EUR/USD or EUR/JPY while weak data could lead to a euro selloff.

GBP

The pound strengthened against its major currency rivals in yesterday’s trading, thanks to the strong improvement in the jobless rate. Although the claimant count change came in weaker than expected at -24.0K versus the estimate at -33.8K and the previous figure was revised to show a lower decline in joblessness, the unemployment rate improved from 7.4% to 7.1%. This is just one point closer to the BOE’s 7% target rate, wherein they would start to consider hiking rates. Meanwhile, the BOE minutes revealed that the vote to keep interest rates and asset purchases unchanged was unanimous.

CHF

The franc barely budged from its current levels against the dollar when the Swiss ZEW economic expectations report printed a decline. The figure dropped from 39.4 to 36.4, reflecting lower confidence in the economy. There are no reports due from Switzerland today so USD/CHF might stay stuck in consolidation, unless US reports print surprises.

JPY

The yen lost ground to the Aussie and the pound but was able to flex its muscles against the Loonie. The BOJ decided to keep their monetary policy unchanged for the meantime but reiterated that they’re ready to ease further if the sales tax hike hurts overall economic growth. There are no major reports lined up from Japan today so it could be all about market sentiment driving yen pairs.

Commodity Currencies (AUD, NZD, CAD)

The Loonie gave up a lot of ground to its major counterparts in recent trading, thanks to the dovish rhetoric of the BOC. Poloz spoke of a possible rate cut, as inflation remains weak and the Loonie remains strong. He pointed out that the appreciating Loonie is hurting the country’s exports. As for the Aussie and Kiwi, these comdolls simply resumed their weakness to the dollar as risk appetite waned. The Chinese HSBC PMI is up for release today and might have a huge impact on their movement.

By Kate Curtis from Trader's Way