Forex Major Currencies Outlook (Dec 10, 2014)

The political uncertainty in Athens sparked fears of geopolitical tension, allowing traders to flock to the safe-havens. For today, the US retail sales release might have a stronger say in price action, as spending is expected to have picked up in November. After all, the Thanksgiving holiday sales were probably enough to boost retail sales, along with the strong gains in hiring for the same month.

EUR

The euro was able to recover to the dollar in yesterday’s sessions, despite the growing uncertainty in Greece. As it turns out a vote will be held in three rounds to keep the current government in place, otherwise the parliament will be dissolved and bring in more uncertainty for the country. Data from Germany was stronger than expected, as the trade balance showed a larger surplus of 20.6 billion EUR, while the French trade deficit came in line with expectations. For today, only the French industrial production report is due and it might take the backseat while markets focus on the political situation in Greece.

GBP

The pound managed to edge slightly higher and take advantage of dollar weakness, even as UK manufacturing production came in weak. The report indicated a 0.7% loss versus the projected 0.2% uptick while industrial production marked a 0.1% decline instead of the estimated 0.3% gain. For today, only the UK trade balance is due and it might show a deficit of 9.5 billion GBP, smaller than the previous 9.8 billion GBP shortfall.

CHF

The franc also took advantage of dollar weakness but remained mostly unchanged to the euro, as Switzerland’s jobs report churned out strong results. The report indicated that the jobless rate improved to 3.1% in November instead of coming in at 3.2%. For today, there are no major reports lined up from Switzerland.

JPY

The yen turned out to be a big winner yesterday as risk aversion took hold of the markets and traders sought a safe-haven alternative. There were no reports released from Japan then while today had a couple of weak readings. The PPI declined from 2.9% to 2.7%, reflecting potentially weaker price pressures, while the BSI manufacturing index slipped from 12.7 to 8.1 instead of improving to 13.7. Japanese consumer confidence is still up for release and another weak reading could put the yen back in selloff mode.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were unable to hold on to their recent wins to the dollar as risk aversion weighed on the higher-yielders. In Australia, talks of an RBA rate cut sparked by NAB’s decline in business confidence from 5 to 1 dragged the currency lower. Earlier today, Westpac reported a 5.7% drop in consumer sentiment while China showed weaker than expected inflation reports. Annual CPI fell from 1.6% to 1.4% while the PPI marked a 2.7% year-over-year decline. Later on, the RBNZ rate statement could be a big mover for the Kiwi, as more downbeat remarks are expected.

By Kate Curtis from Trader's Way