Forex Major Currencies Outlook (March 25, 2014)

Data from the US was weaker than expected, as the flash manufacturing PMI slipped from 57.1 to 55.5 instead of just falling to 56.6. US CB consumer confidence and new home sales data are up for release today, with consumer confidence expected to improve from 78.1 to 78.7 and new home sales likely to fall to 447K from 468K. Also scheduled for today are some testimonies by Fed officials who will probably give their assessment on the US economy and indicate whether they support Yellen’s stance or not.

EUR

The euro bounced against the dollar in recent trading, despite mixed PMI figures from the euro zone. France reported strong results for its manufacturing and services sectors but Germany’s figures fell short, although the region’s figures came in close to consensus. German Ifo business climate is up for release today and it might show a dip from 111.3 to 110.9. Worse than expected data could push EUR/USD back below the 1.3800 mark while strong results could lead the uptrend to resume.

GBP 

The pound was unable to take advantage of dollar weakness in recent trading, leaving GBP/USD to consolidate around the 1.6500 handle. There have been no reports released from the UK on Monday but traders are sitting tight ahead of today’s CPI release, which is forecasted to weaken to 1.7%. If so, that would lower the odds of tightening by the BOE, as the central bank would be keen to keep inflation close to their 2% target.

CHF

The franc took advantage of the dollar’s selloff in recent trading, despite the lack of data from Switzerland. There are still no reports lined up from Switzerland today so franc movement could hinge mostly on market sentiment.

JPY

The yen consolidated against most of its currency counterparts, as there were no major reports released from Japan. The Nikkei managed to clock in a solid 1.8% gain at the start of the week, as Japanese traders returned to their trading desks. There were no reports released from Japan then and none are due today, leaving the yen pairs at the mercy of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls were able to gain from the dollar’s slide yesterday, with NZD/USD holding above the rising trend line on the 1-hour time frame and AUD/USD breaking above .9100. Chinese data was weaker than expected, as the HSBC flash manufacturing PMI sank further, but this caused speculation that the PBOC or Chinese government might start adding stimulus. There are no other reports lined up from the comdoll economies today.

By Kate Curtis from Trader's Way