Forex Major Currencies Outlook (December 12, 2013)

Fed official Fisher was touted as the next Fed Deputy Chair, and traders tried to weigh in on his differing opinions compared to Janet Yellen. Fisher has been a known critic of the quantitative easing program and the Fed’s forward guidance, so he might be able to provide balance to the institution during his term. US retail sales reports are up for release today and given the continuous improvements in hiring, we might see strong figures. Headline retail sales could show a 0.6% increase while core retail sales might post a 0.2% rise.

EUR

The euro continued its ascent against its counterparts, despite the lack of top-tier data from the euro zone. French non-farm payrolls and German CPI came in line with expectations. Euro zone industrial production data is up for release today, along with the ECB monthly bulletin. Unless we see huge disappointments, the euro might still be in for more gains.

GBP

The pound continued to retreat against its counterparts even though the UK didn’t release any data yesterday. According to MPC member Weale, the forward guidance of the central bank has a strong impact at the very start but its effects could wane later on. There are no major reports due from the UK today, as the only release lined up is the CB leading index, which might show another increase following the previous 1.5% reading.

CHF

The franc continued to gain ground against its counterparts, as the SNB still didn’t make any comments regarding the currency’s strength. Today might be a different story though, as the central bank is set to make its interest rate decision. Indications that the policymakers are ready to defend the franc peg might trigger a strong bounce among franc pairs that have been treading lower.

JPY

The yen gained ground against most of its major counterparts on the heels of risk aversion in the currency market. There have been many criticisms of Abenomics popping up, mostly because of the recent weakness in Japanese data. However, selloffs among yen pairs might provide opportunities to buy at better levels, especially if the BOJ decides to reiterate its readiness to pump up stimulus if needed.

Commodity Currencies (AUD, NZD, CAD)

The comdolls also had a mixed performance, as the Loonie and Kiwi strengthened while the Aussie sold off sharply. The RBNZ decided to keep interest rates unchanged at 2.50% for the meantime but hinted of potential hikes if inflationary pressures remain strong. As for Australia, jobs data came in stronger than expected at 21.0K versus the previous 0.7K decline and the estimated 10.1K increase, but the jobless rate still ticked higher from 5.7% to 5.8%. No other major reports are due from the comdolls today.

By Kate Curtis from Trader's Way