Forex Major Currencies Outlook (June 12, 2014)

Crude oil inventories showed a 2.6 million deficit while the Federal budget balance printed a 130 billion USD deficit. Price action among dollar pairs could pick up today with the US retail sales figures up for release. Headline retail sales could show a 0.5% gain while core retail sales might see a 0.4% uptick, both stronger than the previous month’s figures. Initial jobless claims and import prices data are also due today.

EUR

The euro managed to consolidate against the dollar and reduce its losses to the Japanese yen in the latest round of forex trading. There were no reports released from the euro zone then but it appears that some traders booked profits off key support levels on their euro short positions. German WPI and French CPI are due today, both of which could provide clues on whether or not inflation is likely to keep weakening in the region. Euro zone industrial production data is also due today and might show a 0.5% rebound.

GBP

The pound extended its gains to its major forex counterparts when UK jobs data came in strong. The claimant count change made a 27.4K drop in joblessness, enough to bring the UK jobless rate down from 6.8% to 6.6%. This led to speculation that the BOE might start to consider tightening monetary policy or reducing its stimulus soon, pushing the pound to new highs against most of its counterparts.

CHF

The franc kept showing signs of weakness when Swiss retail sales came in much weaker than expected the other day. There have been no reports released from Switzerland yesterday and none are due today, which suggests that traders might dump the franc because of the downturn in Swiss data.

JPY

The yen held on to its recent wins against most of the weaker currencies when Japan’s core machinery orders report printed better than expected results. Analysts were expecting to see an 11.5% decline but the actual figure was down by only 9.1% even with the sales tax hike. This goes to show that the Japanese economy could stay resilient even without BOJ stimulus.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi got a very strong boost in recent trading when the RBNZ hiked interest rates by 0.25% in their latest rate decision. Governor Wheeler went on to say that further tightening moves could be seen as the central bank attempts to keep inflation contained, which means that their rate hiking cycle is not yet over. Meanwhile, the Australian jobs report showed mixed results, with the employment change noting a decline in hiring and a downward revision in the previous month’s results and the jobless rate holding steady at 5.8% instead of rising to 5.9%. There have been no major reports released from Canada and none are due today but rising oil prices appear to be supporting the Loonie.

By Kate Curtis from Trader's Way