Forex Major Currencies Outlook (Dec 18, 2014)

However, Fed head Yellen did point out that they would be patient in determining potential gradual adjustments to monetary policy, which would stay data-dependent. There were three dissenters to this forward guidance, as a couple of hawks insisted on hiking rates sooner rather than later while one dove questioned the Fed’s efforts in boosting inflation. US equities also took the news positively, as the S&P and DJIA marked close to 2% in gains for the day. Initial jobless claims and the Philly Fed index are up for release today, with strong results likely to help the dollar extend its gains.

EUR

The euro gave up ground to the dollar once more while strengthening against the Japanese yen. Only the euro zone final CPI readings were released yesterday and there were no revisions to the headline 0.3% uptick and the core 0.7% increase in inflation. For today, the German Ifo business climate report could have an effect on euro price action, with analysts expecting to see an improvement from 104.7 to 105.6. Stronger than expected data could allow the shared currency to recover.

GBP

The pound was no match to dollar strength but managed to advance against the euro and the yen. Employment data from the UK was stronger than expected, as hiring picked up by 26.9K versus the estimated 19.8K figure while average earnings showed a 1.4% rise. The jobless rate held steady at 6.0% instead of improving to 5.9%. UK retail sales data is up for release today and a weaker 0.3% gain is eyed compared to the previous 0.8% uptick, although an upside surprise could be possible.

CHF

The franc also gave in to dollar strength in recent trading, despite an improvement in Switzerland’s ZEW economic expectations report. The reading climbed from -7.6 to -4.9, indicating less pessimism in the country. For today, SECO economic forecasts are due and any improvements could allow the franc to stay afloat. 

JPY

The yen returned some of its recent gains after risk appetite improved in the financial markets. The FOMC’s pledge to keep rates low for the time being contributed to a rise in global equities, forcing the lower-yielding yen to retreat. There have been no major reports released from Japan then and none are due today, leaving the Japanese currency sensitive to risk flows.

Commodity Currencies (AUD, NZD, CAD)

The comdolls weakened to the dollar in recent trading due to the FOMC statement but regained ground against the yen as risk appetite improved. Canadian wholesale sales marked a weaker than expected 0.1% uptick versus the estimated 0.9% growth while New Zealand reported a stronger than expected 1.0% growth figure for Q3. There are no major reports due from the comdoll economies today.

By Kate Curtis from Trader's Way