Forex Major Currencies Outlook (September 19, 2013)

The policymakers agreed that the recovery isn’t stable yet and that the growth outlook has weakened. Bernanke didn’t provide clear clues on when they plan to taper but market participants are starting to price in the possibility that it won’t happen this year. Housing data from the US was also worse than expected yesterday. For today, initial jobless claims, Philly Fed index, and existing home sales are up for release. 

EUR 

The euro traded up to the 1.3500 handle against the dollar, thanks to the FOMC statement. There were no major reports released from the euro zone yesterday, as most of EUR/USD’s movement was simply a result of dollar weakness. For today, euro zone’s schedule is free from any economic data, which suggests that the euro could continue to take advantage of dollar weakness. 

GBP 

The pound surged past the 1.6000 handle and 1.6100 mark against the dollar yesterday, as the FOMC’s decision against the Septaper contributed to sharp dollar declines. In addition, the upbeat BOE meeting minutes also provided support for the pound. Members voted unanimously to keep interest rates and bond purchases unchanged, and there was no dissent when it comes to stimulus measures. For today, UK retail sales and CBI orders expectations are up for release and strong figures might boost GBP/USD further. 

CHF 

The Swiss franc was able to draw strength from an improved ZEW economic expectations reading, which climbed from 7.2 to 16.3. USD/CHF was able to break below the key .9200 psychological support and might be in for more losses, depending on how today’s SNB rate statement turns out. Upbeat remarks from SNB head Thomas Jordan could keep the franc rallying while downbeat comments could force it to retreat. 

JPY 

The yen packed gains against the dollar but lost ground to its other counterparts in yesterday’s trading. There were no major reports released from Japan, as the yen continues to trade on market sentiment and currency specific data. There are no reports due from Japan again today, which suggests that previous price behavior could carry on. 

Commodity Currencies (AUD, CAD, NZD)

The comdolls were able to benefit from dollar weakness yesterday, as AUD/USD traded up to the .9500 handle while USD/CAD broke below the 1.0300 mark. NZD/USD was also boosted by the New Zealand GDP reading, which came in line with consensus for the second quarter and showed an upward revision for the first quarter. Canadian wholesale sales are up for release today. 

By Kate Curtis from Trader's Way