Forex Major Currencies Outlook (October 22, 2013)

Risk appetite was still up in yesterday’s trading but traders seemed a little more cautious as they unwound some of their dollar positions ahead of today’s NFP event. Before that though, the existing home sales report came in weaker than expected with a downward revision in the previous month’s figure. Stronger hiring is eyed for the month of September, as analysts forecast a 182K rise in employment which should keep the unemployment rate steady at 7.3%. 

EUR

The euro managed to hold on to its recent levels against the dollar as the German PPI release came in better than expected at 0.3% versus the estimated 0.1% uptick. There are no reports due from the euro zone today so euro traders will focus on the U.S. non-farm payrolls release, which is expected to result in EUR/USD rallies if the actual figure disappoints. 

GBP

The pound lost more ground to the dollar yesterday as there were hardly any reports to give the currency an additional boost. For today, the public sector net borrowing report is due and a smaller figure is expected, which would reflect smaller debt by the government. This should be positive for the pound but a bigger mover for pound pairs might be the NFP release which would affect overall market sentiment. 

JPY

The yen continued its losing ways to its major counterparts as the Nikkei stock index chalked up almost 1% in gains. Risk appetite was still up during the Asian session, much to the disappointment of the lower-yielding yen. There are no major reports lined up from Japan today so yen trading could also be driven by the sentiment resulting from the NFP release in today’s New York session. 

CHF

The franc simply lazed around the charts yesterday since there were no fresh catalysts from Switzerland. Not even the US existing home sales report was able to bust USD/CHF out of consolidation above the .9000 handle as traders are sitting on their hands ahead of the US NFP release. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground to the US dollar in yesterday’s trading as there were no further releases that fueled their rallies. The New Zealand dollar pulled back to the .8400 area while USD/CAD bounced from 1.0300. Canadian wholesale sales came in slightly below consensus at 0.5% versus the estimate at 0.6%. Canadian retail sales data is up for release today and weaker increases are expected compared to the previous month’s figures. 

By Kate Curtis from Trader's Way