Forex Major Currencies Outlook (February 3, 2014)

The quarterly employment cost index came in stronger than expected at 0.5% while personal spending showed a better than expected 0.4% uptick. The major report due today is the ISM manufacturing PMI, which is expected to dip from 57.0 to 56.2.

EUR

The euro lost further ground to the dollar on Friday, as risk aversion stayed in the markets. Euro zone data was mixed, with Germany showing a weaker than expected retail sales figure and France printing a better than expected consumer spending report. The CPI flash estimate fell short of consensus and posted a 0.7% uptick while the jobless rate improved to 12.0%. Spanish and Italian manufacturing PMIs are due today and these might not have such a material impact on euro price action.

GBP

The pound caved to the dollar on Friday since there were no major reports from the United Kingdom to give it support. Today, the UK is set to print its manufacturing PMI figure, which could dip from 57.3 to 57.1. A stronger than expected reading might be enough to give the pound a boost against its counterparts though.

CHF
The franc gave up its recent gains to the dollar on Friday, as USD/CHF bounced up from the .9000 major psychological level. There were no major reports released from Switzerland then, leaving the franc at the mercy of risk sentiment. Today, the SVME PMI is up for release and it might show a climb from 53.9 to 55.1, which could allow the Swissy to regain ground.

JPY

The yen continued to take advantage of the risk-off market environment, as it packed gains against the euro and the Australian dollar. Data from Japan was mixed on Friday and there are no reports lined up for today. If you’re trading the yen pairs, better take a look at the performance of Asian equities and the Nikkei to gauge market sentiment.

Commodity Currencies (AUD, NZD, CAD)
The comdolls surprisingly managed to hold their ground against the dollar on Friday, as the Aussie and Loonie rebounded. Australian data was actually weaker than expected so the bounce could be chalked up to profit-taking ahead of the Chinese New Year festivities. Meanwhile, Canada printed a 0.2% monthly gain in GDP, which allowed the Loonie to stay afloat. Earlier today, Australia reported a weaker than expected building approvals figure and a 0.3% decline in job advertisements. Medium-tier inflation reports are set for release from Canada in the US session.

By Kate Curtis from Trader's Way