Forex Major Currencies Outlook (Feb 5, 2015)

Data from the US was mostly weaker than expected, as the ADP non-farm employment change showed a 213K increase, short of the estimated 224K gain and the previous 253K rise. This sets the tone for a potential disappointment during the NFP release on Friday, which could drive the dollar lower against its forex counterparts until then. Initial jobless claims and trade balance are up for release today.

EUR 

The euro gave up ground to most of its forex counterparts, despite stronger than expected medium-tier data. The Spanish, Italian, and euro zone services PMI all exceeded expectations while the region’s retail sales report indicated an upside surprise of 0.3% versus the projected 0.1% decline. For today, German factory orders data is up for release and it is expected to show a 1.4% rebound from the previous 2.4% decline.

GBP

The pound was able to strengthen in recent trading, thanks to better than expected UK services PMI. The reading improved from 55.8 to 57.2, indicating a pickup in industry expansion. The BOE interest rate statement is scheduled for today and a dovish outlook is expected, although a more confident assessment might lead to more pound gains. 

CHF

The franc moved mostly sideways in recent trading, as there were no major reports released from Switzerland yesterday. There are still no top-tier reports lined up for today, indicating that the Swissy might function more as a counter currency or react more to risk sentiment. 

JPY

The yen advanced to its forex counterparts when risk aversion popped its head back in the financial markets. There have been no reports released from Japan yesterday and none are due today, indicating that risk sentiment might drive price action among yen pairs today. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls were once again in a weak spot, as Australia and Canada printed downbeat reports. Canada’s Ivey PMI slipped to contractionary territory, as the reading tumbled from 55.4 to 45.4. Earlier today, Australia printed a mere 0.2% uptick in retail sales, short of the projected 0.3% gain. Canada’s trade balance is up for release today and a larger deficit of 1.2 billion CAD is eyed. 

By Kate Curtis from Trader's Way