Forex Major Currencies Outlook (June 23, 2014)

There have been no major reports from the US economy then, and only the flash manufacturing PMI and existing home sales data are due today. The manufacturing PMI is expected to dip from 56.4 to 56.1 in June while the existing home sales report might show a pickup from 4.65 million to 4.74 million. Stronger than expected data might lend more support to the dollar while bleak figures could lead the selloff to resume.

EUR

The euro still showed signs of weakening against its major forex counterparts, as the prospect of further ECB easing weighed on the shared currency. German PPI was weaker than expected, as the report showed a 0.2% drop in producer prices after the previous 0.1% decline. Meanwhile, the current account balance came in better than expected, as the surplus grew to 21.5 billion EUR versus the estimated 19.4 billion EUR. On top of that, the previous month’s reading was revised higher to 19.6 billion EUR.

GBP

The pound rebounded on Friday, as the public sector net borrowing report of the UK government came in better than expected. The deficit stood at 11.5 billion GBP instead of the estimated 11.8 billion GBP, while the previous month’s reading was revised to a better 9.0 billion GBP borrowing figure. Only the BOE credit conditions survey is due from the UK today and improvements might lead to more pound gains.

CHF

The franc seemed ready to resume its selloff on Friday, following the short-term rally spurred by the SNB inaction. There have been no reports released from Switzerland on Friday and none are due today, which suggests that the franc might be sensitive to risk sentiment for the next few trading hours.

JPY

The yen weakened towards the end of the week when BOJ Governor Kuroda admitted that the recent sales tax hike is causing fluctuations in the economy. There have been no other events in Japan last Friday but the flash manufacturing PMI released earlier today showed an improvement from 49.9 to 51.1, reflecting a return to expansion for the industry. Another speech by Kuroda is scheduled for today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls strengthened at the start of the week when Chinese manufacturing PMI came in stronger than expected, and confirmed hopes of a rebound in the world’s second largest economy. The HSBC flash figure climbed from 49.4 to 50.8 in June, outpacing the consensus at 49.7. Risk appetite has been supporting the higher-yielding comdolls so far and it appears that they might be able to hold on to their latest gains since there are no other reports lined up for the rest of the day. Earlier this week, New Zealand reported a 0.3% uptick in visitor arrivals and also added to Kiwi gains.

By Kate Curtis from Trader's Way