Forex Major Currencies Outlook (September 12, 2013)

Only the initial jobless claims release is on the U.S. schedule today and a slightly higher number of claimants is expected, from 323K the other week to 332K last week. Also keep tabs on Dudley’s speech at 2:00 pm GMT as he could discuss more details on the upcoming Septaper. 

EUR

The euro continued to rally against the dollar but lost ground to the Japanese yen yesterday. Risk flows benefitted the euro, but it appears that the improvements in Japan’s business index outweighed euro strength. For today, Draghi is set to give a speech sometime in the London session and possibly give more details as to why the central bankers discussed lowering interest rates in their latest meeting. 

GBP

The pound traded above the 1.5800 mark against the U.S. Dollar but retreated to the Japanese yen. The UK claimant count change report printed better than expected results, showing a 32.6K drop in joblessness and bringing the unemployment rate from 7.8% to 7.7%. BOE inflation report hearings are scheduled today and this should shed more light on whether Carney will alter his stance on not hiking rates for the next two years. UK 10-year bond auction is also scheduled today. 

CHF

USD/CHF sank to the .9300 level in yesterday’s trading as dollar weakness persisted. The pair is consolidating around this area though, as it coincides with last week’s lows. There are no major reports released from Switzerland yesterday and today so the behavior of USD/CHF could depend on US data and risk sentiment. 

JPY

The yen rebounded strongly yesterday on the heels of better than expected business indicators. The BSI manufacturing index improved from 5.0 to 15.2, reflecting stronger optimism among manufacturers and hinting at better business prospects in the coming months. Core machinery orders, however, came in weaker than expected as it showed a flat reading and hints at lower production in the coming months. 

Commodity Currencies (AUD, NZD, CAD)

The RBNZ expressed its intention to hike interest rates starting next year, allowing NZD/USD to trade above the .8100 major psychological level. The Australian jobs release, on the other hand, turned out to be a huge disappointment as the economy reportedly shed 10.8K jobs in August and had a downward revision to the July figure. As for the Loonie, only the national house price index is set for release in today’s NY session. 

By Kate Curtis from Trader's Way