Forex Major Currencies Outlook (January 29, 2014)

Data from the US was weaker than expected, with the headline durable goods orders report showing a 4.3% decline and the core durable goods orders printing a 1.6% drop. This was weak compared to the estimated 1.9% and 0.7% uptick respectively. For today, the big event is the FOMC statement, as traders are waiting to see if the Fed will still push through with its taper despite the weak December NFP data.

EUR

The euro edged a bit lower than its counterparts when German import prices printed a flat reading. This revived talks of potential deflation in the euro zone, as traders became concerned that the largest economy might also be in danger. German GfK consumer climate is up for release today and the index might show an improvement from 7.6 to 7.8. Also due today is data on euro zone private loans and money supply.

GBP

The pound showed a bit of weakness yesterday when the U.K. GDP simply came in line with expectations of 0.7% growth. This is slightly slower compared to the previous quarter’s 0.8% GDP reading. BOE Governor Carney is set to testify today and if he issues another round of downbeat comments regarding monetary policy and the jobless rate, the pound might be in for more losses.

CHF
The franc lost some ground to the dollar in yesterday’s trading, as the USD/CHF pair found support around the .8950 minor psychological level and climbed back to the .9000 mark. There have been no reports released from the Swiss economy yesterday while today has the UBS consumption indicator on tap. The index came in at 1.43 in the previous month and a higher reading might be positive for the franc.

JPY

The yen gave up some of its recent gains to its counterparts when risk sentiment improved in recent trading. However, the Nikkei index chalked up a 0.17% decline for the day, indicating that market sentiment isn’t so good in the Asian markets. There have been no major reports released from Japan yesterday and none are due today, which suggests that risk sentiment might keep driving price action.

Commodity Currencies (AUD, NZD, CAD)

The comdolls made a small recovery to the dollar in yesterday’s trading, but most were unable to hold on to their gains. There have been no major reports released from Australia, Canada, or New Zealand recently as the comdolls simply moved to the tune of risk sentiment. Later on, the RBNZ will make its interest rate decision and traders are expecting to hear how the central bank plans to address inflation in the country.

By Kate Curtis from Trader's Way