Forex Major Currencies Outlook (May 12, 2014)

. JOLTS job openings data was weaker than expected at 4.01M versus the estimated 4.21M reading and the previous 4.13M reading. Wholesale inventories was also worse than expected with a 1.1% increase versus the projected 0.5% uptick, indicating that stockpiles are higher and that there is a slack in purchases. Only a speech by Fed member Plosser is lined up for today, along with the release of the Federal budget balance.

EUR

The euro continued its descent to its major counterparts towards the end of the week, as traders positioned ahead of an ECB rate cut in June. Data from the euro zone was also weaker than expected since Germany reported a smaller than expected trade surplus. There are no reports due from the euro zone today but it’s likely that the selloff for the shared currency could continue.

GBP

The pound erased most of its recent gains despite stronger than expected manufacturing production and trade balance data. UK manufacturing production saw a 0.5% uptick, stronger than the estimated 0.3% gain but weaker compared to the previous 1.0% increase. The trade deficit shrank from 8.7 billion GBP to 8.5 billion GBP, reflecting an improvement in exports. Only the BRC retail sales monitor is due today and it might not have such a huge impact on pound direction.

CHF

 The franc gave up most of its recent winnings as the US dollar took the limelight last Friday. There were no reports released from Switzerland then, leaving the franc at the mercy of risk sentiment. Swiss retail sales is due today and a 1.9% increase is expected, stronger compared to the previous 1.0% gain.

JPY

The yen managed to score wins to the euro and pound last week, despite the lack of top-tier data from Japan. Over the weekend, the current account balance release had a weaker than expected result. Economy Watchers sentiment data is due today and so is the M2 money stock, but yen pairs are more inclined to react to risk sentiment and country-specific data.

Commodity Currencies (AUD, NZD, CAD)

 The comdolls edged slightly lower on Friday, as risk aversion took over the markets. In particular, the Loonie was the biggest loser among the three since Canada printed weak jobs data. Employment change slipped by 28.9K instead of increasing by the estimated 12.8K figure, keeping the jobless rate unchanged at 6.9%. Earlier today, Australia’s NAB business confidence index showed an improvement from 4 to 6, helping keep the Australian dollar afloat.

By Kate Curtis from Trader's Way