Forex Major Currencies Outlook (May 15, 2014)

US PPI data came in stronger than expected, with the headline figure printing a 0.6% increase and the core figure showing a 0.5% gain. For today, US CPI figures are due along with the initial jobless claims release. Core CPI could pick up by 0.1% while headline CPI could show a 0.3% uptick. US Empire State manufacturing index and Philly Fed index are also due today.

EUR

The euro struggled to hold on to its recent levels to the dollar but continued to lose ground to the Japanese yen. Euro zone industrial production came in line with expectations and showed a 0.3% decline in activity. There are plenty of major events in the euro zone today, with French and German preliminary GDP figures due. Euro zone flash GDP is expected to come in at 0.4%, higher than the previous 0.2% growth figure.

GBP

The pound gave up a lot of its recent gains when the BOE Inflation Report revealed that the central bank was no longer as hawkish as it used to be. BOE Governor Carney acknowledged the recent improvements in the economy but stopped short of increasing growth and inflation forecasts. He also said that a rate hike isn’t necessary to tame housing inflation, as there other fiscal measures that can be used. UK claimant count change also turned out to be a disappointment but the jobless rate still managed to improve to 6.8%.

CHF

The franc rebounded in the latest trading sessions, as the Swiss ZEW economic expectations index climbed from 7.0 to 7.4. Swiss PPI is due today and a 0.3% uptick is eyed to follow the previous flat reading. Stronger than expected results could reinforce the franc’s strength as it would ease fears of deflation in Switzerland.

JPY

The yen continued to gain ground in yesterday’s trading sessions as risk appetite waned. Data from Japan was stronger than expected, as the preliminary GDP reading came in at 1.5% instead of the estimated 1.0% growth figure. Tertiary industry activity showed a 2.4% gain in line with estimates. However, it remains to be seen how these figures could be affected by the latest sales tax hike.

Commodity Currencies (AUD, NZD, CAD)

Comdolls retreated in the previous trading sessions when risk appetite weakened. There were also no major reports from the comdoll economies to give these currencies support. In New Zealand, the Business NZ manufacturing index slipped from 58.0 to 55.2. Australia’s new motor vehicle sales stayed flat after declining by 0.3% in the previous month. Canadian manufacturing sales is due later on and a 0.2% uptick is expected.

By Kate Curtis from Trader's Way