Forex Major Currencies Outlook (October 29, 2013)

It also extended its gains against the commodity currencies as risk remained off in the financial markets. Data from the US economy was much weaker than expected, as the pending home sales report printed a 5.6% decline versus the estimated 0.5% rebound. Medium-tier figures, such as capacity utilization and industrial production, printed better than expected results. For today, US core retail sales, PPI, and CB consumer confidence are up for release. US retail sales are projected to be up by 0.2% for the headline figure and 0.4% for the core figure, while consumer confidence is likely to decline from 79.7 to 75.2. 

EUR

The euro stayed in consolidation against the US dollar and lost a bit of ground to the yen, as there were no major reports released from the euro zone yesterday. Germany’s GfK consumer climate index is the only release lined up from the euro zone today so it could have a strong impact on euro pairs. The reading is projected to climb from 7.1 to 7.3, reflecting increased optimism for the euro zone’s largest economy. A weaker than expected figure, on the other hand, could lead to a euro selloff as it would imply weaker confidence. 

GBP

The pound gave up a lot of ground to its major counterparts in yesterday’s trading, pushing GBP/USD down to the 1.6100 area and GBP/JPY down to 157.00. Data from the UK was weaker than expected as the CBI realized sales figure plummeted from 34 to 2 instead of just dipping to 33. Also, MPC member Dale gave a testimony and remarked that the option of further easing is still on the table for the BOE. This was enough to trigger a pound selloff as traders were reminded that the UK has printed weak data recently. UK net lending to individuals data is up for release today along with the mortgage approvals report. 

CHF

The franc retreated to the US dollar in yesterday’s trading since there just wasn’t enough buying power to sustain a break below USD/CHF’s .8900 level. There were no reports released from Switzerland yesterday and there are none due today, which suggests that the pair might keep pulling back depending on how US data turn out. 

JPY

The yen managed to close most of the weekend gaps against its counterparts, as Japan printed strong data. Household spending and retail sales were both better than expected while the jobless rate was as expected at 4.0%. Household spending increased by 3.7% from a decline of 1.6% while retail sales grew 3.1% instead of the estimated 1.9% rise. No other reports are due from Japan today so these recent upbeat figures might be enough to keep the Japanese currency supported. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to give way to the dollar in yesterday’s trading, as sentiment for these currencies was mostly bearish. AUD/USD slid to the .9500 area while NZD/USD edged lower to .8300. There were no reports released from Australia and New Zealand yesterday and there are none due today. As for Canada, BOC Governor Poloz is set to give a speech that might clarify the BOC’s change in monetary policy bias. Also due from Canada are medium-tier inflation reports. 

By Kate Curtis from Trader's Way