Forex Major Currencies Outlook (July 1, 2014)

Pending home sales marked a 6.1% increase while Chicago PMI fell from 65.5 to 62.6, reflecting a weaker expansion in the manufacturing industry. US ISM manufacturing PMI is up for release today and an improvement from 55.4 to 55.6 is expected, but weaker than expected data could push the dollar lower against its counterparts.

EUR

The euro recovered in recent trading, as inflation data showed some improvement. The headline flash CPI estimate for the euro zone held steady at 0.5% while the core CPI forecast improved from 0.7% to 0.8%. German retail sales, however, was weaker than expected at -0.6% versus the estimated 0.8% increase. Italian and Spanish manufacturing PMI are up for release today and both are expected to show improvements. German unemployment change is also due today and a 9K drop in joblessness is set to follow the previous 24K drop in hiring.

GBP

The pound made another strong upside break against its forex rivals when UK net lending to individuals data came in stronger than expected. The report showed a 2.7 billion GBP reading versus the estimated 2.5 billion GBP figure and the previous 2.4 billion GBP reading. UK manufacturing PMI is up for release today and a dip from 57.0 to 56.7 is expected, but stronger than expected data could allow the pound to extend its rally.

CHF

The franc gained ground to the dollar in recent trading even though there were no reports released from Switzerland. For today, the SVME PMI is due and it might show a climb from 52.5 to 52.6, which might help give another boost to the franc. Weak data, on the other hand, could force the Swiss currency to return most of its recent wins.

JPY

The yen gave up ground to its higher-yielding forex counterparts when Japan’s Tankan reports showed weakness. The manufacturing component showed a drop from 17 to 12 while the non-manufacturing index slid from 24 to 19 as expected. Earlier today, the final manufacturing PMI release showed a small upward revision from 51.1 to 51.5 but failed to lift the yen. There are no other reports up for release from the Japanese economy for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

The comdolls extended their wins to the dollar, despite relatively bleak reports from Australia, New Zealand, and Canada. The monthly Canadian GDP reading showed a 0.1% growth figure instead of the estimated 0.2% expansion. Earlier today, the Chinese official manufacturing PMI release showed a slightly better than expected 51.0 figure versus the previous 50.8 reading. The RBA rate decision is the main market mover for the Australian dollar today but no policy changes are expected. No other reports are due from the comdolls, as Canada has a bank holiday today.

By Kate Curtis from Trader's Way