Forex Major Currencies Outlook (January 31, 2014)

The advanced GDP reading came in at 3.2% versus the estimated 3.3% growth figure while initial jobless claims posted a higher than expected 348K increase. The pending home sales report was a huge disappointment with its 8.7% decline instead of the mere 0.1% expected downtick. Medium-tier reports such as core PCE price index, personal income and spending, and Chicago PMI are due from the US today.

EUR

The euro finally gave way from consolidation in yesterday’s trading as risk aversion took over the markets. Data from the euro zone was actually mixed, with German preliminary CPI coming in weak and jobs data coming in strong. The preliminary CPI showed a 0.6% decline instead of the estimated 0.4% dip while the unemployment change came in at -28K, better than the projected -5K figure. German retail sales, French consumer spending, and the region’s CPI figures are up for release today.

GBP

The pound lost further ground in recent trading, despite better than expected net lending to individuals data. The report showed a 2.3 billion GBP figure, higher than the projected 1.9 billion GBP reading. However, M4 money supply and mortgage approvals were slightly weaker than expected. Earlier today, the UK GfK consumer confidence figure printed a rise from -13 to -7, better than the consensus at -12. No other reports are due from the UK today.

CHF

The franc was unable to bounce back to the dollar in yesterday’s trading as the Swiss KOF economic barometer came in a bit below consensus. The figure rose from 1.95 to 1.98 but was short of the estimate at 2.02. There are no reports due from Switzerland today so the franc might simply react to US data.

JPY

The yen gained on risk aversion yesterday but gave back most of its gains earlier today when Japan released a mixed set of economic data. The national core CPI was stronger than expected at 1.3% while the Tokyo core CPI came in as expected at 0.7%. Household spending was weaker than expected but the jobless rate showed an improvement from 4.0% to 3.7%. Housing starts is still set for release later on today but it appears that the yen is losing ground because of the improvement in sentiment.

Commodity Currencies (AUD, NZD, CAD)
The comdolls put up a good fight against the dollar in yesterday’s trading, as AUD/USD bounced back to .8800 while NZD/USD held on to the .8150 handle. Data from Australia was mostly weaker than expected while China also showed signs of slowing down. Earlier today, Australia’s PPI came in at 0.2%, weaker than the estimated 0.7% increase. Canadian monthly GDP is up for release today and a 0.2% growth figure is expected.

By Kate Curtis from Trader's Way