Forex Major Currencies Outlook (June 19, 2014)

While the FOMC expects employment and inflation to improve, they also agreed to keep interest rates low for a considerable time. Yellen did not give any time frame on when the Fed might start tightening, leading to another wave of dollar weakness. For today, initial jobless claims and Philly Fed index are up for release.

EUR

The euro made a bit of a recovery against the dollar yesterday, as there were no major reports released from the euro zone. There are still no major reports lined up from the region today, as the shared currency could react to the SNB interest rate decision later on.

GBP

The pound had a volatile trading day, with the BOE meeting minutes setting the tone for future monetary policy expectations. The minutes revealed that policymakers are looking to hike interest rates within the year, but it appears that markets have already priced in this possibility and were hoping to hear more hawkish remarks from the central bank. UK retail sales are up for release today and a 0.5% decline is expected to follow the previous 1.3% increase.

CHF

The franc is in for some action in today’s trading sessions, with the SNB set to announce its rate statement. Recall that SNB head Thomas Jordan previously said that they might ease if the ECB decides to cut rates. After all, they are intent on keeping the franc weak and holding on to the EUR/CHF peg.  Jawboning or actual intervention might also be a possibility.

JPY

The yen gave up a bit of ground when risk appetite surged in the late trading sessions, as the FOMC’s pledge to keep interest rates low drove equities to new highs. There have been no reports released from the Japanese economy then and none are due today, which suggests that the yen might keep moving to the tune of risk sentiment for the rest of the day.

Commodity Currencies (AUD, NZD, CAD)

Despite the weaker than expected New Zealand GDP reading of 1.0% versus the estimated 1.2% growth, the New Zealand dollar was able to draw support from analysts’ estimates that another RBNZ rate hike will take place in July. The Australian dollar also drew support from these forecasts. Meanwhile, Canada printed stronger than expected wholesale sales, which were up by 1.2% versus the expected 0.3% uptick. No reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way