Forex Major Currencies Outlook (April 7, 2014)

Although the February figure was revised higher, the March reading came in below the consensus of a 200K increase. The jobless rate also held steady at 6.7% instead of improving to the estimated 6.6% figure. This confirms Yellen’s remark that the labor sector is still very weak and that it could continue to rely on Fed stimulus in the near term. There are no major reports lined up from the US economy today so traders might continue to trade on the post-NFP sentiment.

EUR

The euro showed more signs of weakness on Friday and it still ended weaker to the dollar in spite of bleak NFP figures. German factory orders came in line with consensus and showed a 0.6% uptick while euro zone retail PMI showed an improvement from 48.5 to 49.2. Perhaps traders are starting to price in more easing from the ECB, based on the latest remarks from the ECB rate statement. German industrial production and Sentix investor confidence are up for release today.

GBP

The pound gave up some gains to the dollar on Friday, despite the initial bounce of GBP/USD after the NFP release. UK Halifax HPI came in below expectations and showed a 1.1% decline instead of the estimated 0.7% uptick. There are no reports due from the UK today but traders might start pricing in upbeat remarks or more talks of rate hikes on the upcoming BOE rate decision later on this week.

CHF

The franc lost ground to all of its major counterparts on Friday as there were no reports to provide support for the Swiss currency. Data on foreign currency reserves is up for release from Switzerland today and this should show how much the SNB is spending to keep the franc’s value low. Also due today is Swiss CPI and a 0.2% uptick in price levels is expected.

JPY

The yen continued to weaken against most of its major counterparts, except for the much weaker euro, as traders anticipated dovish BOJ remarks or even further easing to make up for the slack caused by the sales tax hike this month. There were no reports released from Japan last Friday but the Japanese currency also managed to chalk up some gains to the dollar, thanks to the weak NFP. Japanese leading indicators is due today and this might not have such a large impact on price action ahead of Tuesday’s BOJ statement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls strengthened against the dollar and the yen on Friday, as risk appetite picked up and traders took advantage of the weak NFP and downbeat outlook for Japan. Canadian jobs data turned out stronger than expected, as the employment change figure showed a 42.9K reading instead of the estimated 21.5K figure while the jobless rate fell from 7.0% to 6.9%. However, Canada’s Ivey PMI missed the mark and slipped from 57.2 to 55.2 instead of improving to 58.3. Only the BOC business outlook survey and New Zealand NZIER business confidence index are due from the comdolls today.

By Kate Curtis from Trader's Way