Forex Major Currencies Outlook (September 10, 2013)

The weak jobs report prompted traders to worry if the September will push through, leading to an unwinding of some dollar long positions. Consumer credit data from the U.S. revealed a slight downturn, hinting at a drop in spending and confidence. No major reports due from the U.S. today could mean that risk sentiment will dominate price action for dollar pairs. 

EUR

The euro extended its gains against the dollar and yen in yesterday’s trading, although a fresh batch of worries could be present in the euro zone. Italian officials are trying to unseat Silvio Berlusconi from the Senate because of the charges he is facing, reviving political troubles in Italy. A snap election could lead to a hung parliament, which might make it more difficult to implement fiscal reforms. As for data, only the French industrial production report is due today and it isn’t likely to spur large moves for the euro. 

GBP

The pound was able to trump the dollar and the yen yesterday, as GBP/USD climbed to the 1.5700 handle. There were no economic reports released from the UK, as the pound simply took advantage of dollar weakness and the improvement in risk sentiment. For today, the UK just reported a huge jump in its RICS house price balance, providing more support for the pound. Later today, the UK will hold its 30-year bond auction. 

CHF

Swiss retail sales came in weaker than expected, but it wasn’t enough to stop the franc from rallying against the dollar. Spending increased by only 0.8%, a fourth of the estimated 3.2% jump and less than half the previous 2.3% increase. This spells negative prospects for Swiss economic growth, which might later on weigh on the franc. There are no reports due from Switzerland today so the franc pairs could take their cue from US or euro zone reports. 

JPY

The yen continued to sell off against its major counterparts, as data from Japan hinted at further weaknesses. The BOJ monetary policy meeting minutes contained no surprises but the policymakers did express their openness to further easing if necessary. Japan released its tertiary industry activity index today and showed a 0.4% decline. The 30-year bond auction is scheduled later today. 

Commodity Currencies (AUD, CAD, NZD)

The comdolls were big winners in Monday’s trading, as the improvement in risk appetite and dollar weakness allowed the Aussie, Kiwi, and Loonie to extend their gains. AUD/USD broke above the key .9200 handle while NZD/USD solidified its stay above the .8000 mark. Australian NAB business confidence showed an improvement from -3 to 6, reflecting a return to optimism. Chinese fixed asset investment, retail sales, and industrial production are due today. 

By Kate Curtis from Trader's Way