Forex Major Currencies Outlook (July 17, 2013)

Industrial production was better than expected at 0.3% while capacity utilization came in line with consensus at 77.8%. US building permits and housing starts are due today but the bigger market mover could be Fed head Bernanke’s speech, as the Chairman is expected to set the record straight regarding the stimulus taper plan.

EUR

 EUR/USD broke to the upside in yesterday’s trading, as the pair landed back above the 1.3100 handle. Data from the euro zone was mixed, as the German ZEW disappointed while the euro zone ZEW was better than expected. The German ZEW figure dipped from 38.5 to 36.3 while the euro zone ZEW reading climbed from 30.6 to 32.8. Only the German bond auction is scheduled for the euro zone today.

GBP

The pound had a choppy trading day, as the UK CPI release did very little to provide direction for pound pairs. The actual figure fell a little short of consensus at 2.9%, higher than the previous 2.7% reading. For today, the claimant count change is up for release and it is slated to show a 7.5K decline in unemployment claimants for June. Also due today is the MPC votes for asset purchases and interest rates, and it would be interesting to see how Carney voted in this meeting.

CHF

No reports released from Switzerland yesterday yet the franc still managed to post some gains against the US dollar. For today, the Swiss ZEW economic expectations report is due and it is expected to show an improvement from the previous 2.2 reading.

JPY

The yen gained against the dollar but lost ground to the pound in yesterday’s trading. EUR/JPY managed to stay stuck in consolidation though. Only the monetary policy meeting minutes were released from Japan and it revealed that BOJ policymakers are starting to see some notable improvements in the Japanese economy. There are no reports due from Japan for the next 24 hours, which suggests that the movement of yen pairs could depend on currency-specific events.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar got a strong boost from the RBA minutes, which showed that the central bank is happy that the Aussie depreciation is contributing positively to economic activity. Only medium-tier business sentiment data is due from Australia in the coming trading hours while Canada is set for the BOC interest rate decision. This is Poloz’s first rate statement so it should be indicative of how monetary policy will fare in the future.

By Kate Curtis from Trader's Way