Forex Major Currencies Outlook (June 13, 2014)

The headline figure showed a 0.3% uptick versus the estimated 0.5% gain while the core version of the report showed a 0.1% increase instead of the projected 0.4% rise. The good news though is that the previous month’s readings enjoyed small upward revisions. US PPI and preliminary UoM consumer sentiment data are due today and another set of weak figures might keep the dollar weak until the end of the trading day.

EUR

The euro struggled to pause from its sharp selloff to the dollar as medium-tier data from the euro zone came in weaker than expected. Germany reported a 0.1% decline in its wholesale price index while France showed a flat reading for its CPI, reminding market watchers that deflation is a very real threat in the region. French final non-farm payrolls and German final CPI are due today, with downward revisions likely to result in euro weakness.

GBP

The pound staged a strong rally against all of its major forex counterparts when BOE Governor Carney stated that the UK central bank might hike interest rates earlier than markets expect. He noted that house price inflation might force the central bank to tighten earlier even if there’s considerable slack in the economy. Only the UK CB leading index is due today and this might not have such a huge impact on pound action.

CHF

The franc continued to lose ground to its forex trading rivals despite the lack of data from Switzerland. It appears that euro weakness is also dragging the franc lower to its counterparts. There are still no reports due from Switzerland today so the franc might keep following the euro’s footsteps or might be sensitive to risk sentiment.

JPY

The yen had a mixed performance as it simply reacted to currency-specific events. It lost ground to the Kiwi and pound but was able to advance against the Aussie and euro. There have been no major reports released from Japan yesterday as traders are gearing up for today’s BOJ interest rate decision. No monetary policy changes are expected but it will be interesting to see how the central bank reacts to the latest set of economic reports. Optimistic remarks could keep driving the yen higher.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance, with the Kiwi being the strongest among the group. After all, the RBNZ just hiked interest rates again and hinted that they’re not done with tightening. The Australian dollar suffered a brief selloff thanks to weak jobs data while the Loonie put up a good fight. Chinese industrial production and retail sales reports are due today and these might have a strong impact on market sentiment and comdoll trading.

By Kate Curtis from Trader's Way