Forex Major Currencies Outlook (April 10, 2014)

Some policymakers stressed the need to tighten gradually so as to not hurt inflation. This shows that Yellen’s rate hike time frame was merely a personal opinion and not necessarily a consensus among FOMC members. This might keep the dollar weak in the near term, as traders reduce or close their long dollar positions. Only the initial jobless claims report is up for release from the US economy today and this might not have such a huge impact on dollar movement.

EUR

The euro was able to rally against the dollar despite more remarks from ECB officials hinting at negative deposit rates. Data from the euro zone was actually weaker than expected as Germany printed a smaller than expected trade surplus of 15.7 billion EUR versus the estimated 18.0 billion EUR. French industrial production and CPI, along with Italian industrial production data, are up for release today but the euro might continue to take advantage of dollar weakness if these reports come in as expected.

GBP

The pound was one of the bigger winners in recent trading, as GBP/USD surged to a new monthly high after the FOMC release. The pair is on track to break past the previous highs around 1.6824 as traders price in positive expectations for today’s BOE interest rate decision. Recall that Carney spoke of hiking rates before the UK general elections next year so traders are expecting a round of hawkish remarks. UK trade balance and RICS house price balance came in stronger than expected.

CHF

The franc extended its winning streak to the dollar, despite the lack of data from Switzerland yesterday. There are still no reports due from the country today but the franc might continue its winning streak to the dollar on the heels of the FOMC meeting minutes.

JPY

The yen lost some ground to its major counterparts but struggled to hold steady to the dollar in recent trading. Risk sentiment still favored the higher-yielding currencies as the prospect of a delayed Fed rate hike could provide support for other global economies. Japan’s core machinery orders were weaker than expected with a decline of 8.8% versus the estimated 3.2% drop. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of dollar weakness, with AUD/USD moving closer to the .9400 major psychological level and NZD/USD surging above .8700. Australian home loans showed a stronger than expected 2.3% increase while inflation expectations improved from 2.1% to 2.4%. Up next is the Australian jobs release which might show a weaker gain in hiring compared to the previous month’s 47.3K jump. Chinese trade balance is also due today and might impact Aussie movement.

By Kate Curtis from Trader's Way