Forex Major Currencies Outlook (May 05, 2016)

The ADP non-farm employment change printed a meager 156K gain in hiring versus the projected 205K increase, suggesting a possible downside surprise for the NFP. On the other hand, the ISM non-manufacturing PMI rose from 54.5 to 55.7, higher than the consensus at 54.7. For today, initial jobless claims are up for release and a 261K reading is eyed.

EUR

The euro consolidated to the dollar and yen but was able to advance against commodity currencies when euro zone data came in mostly in line with expectations. German final services PMI and Italian services PMI both beat expectations but euro zone retail sales fell 0.5% instead of printing the estimated 0.1% uptick. Euro zone banks are closed in observance of Ascension Day today. 

GBP

The pound was in a weak spot against most of its forex rivals as the UK construction PMI came in weaker than expected. The reading fell from 54.2 to 52.0 to indicate a much slower pace of industry growth. For today, the services PMI is due and a drop from 53.7 to 53.6 is expected, with another downbeat result likely to push the pound lower. 

CHF

The franc returned some of its recent wins despite the lack of top-tier reports from Switzerland. There are no reports lined up from the Swiss economy today since banks are closed in observance of Ascension Day. 

JPY

The yen was slightly weaker against its forex peers since Japanese traders were out on a holiday. There are no reports up for release from the Japanese economy today which means that risk sentiment could drive yen pairs around. 

Commodity Currencies (AUD, NZD, CAD)

The Loonie was one of the weakest performers as the forest fires in Alberta led to the shutdown of some oil operations in the area. US crude oil inventories rose 2.8 million barrels, which suggests that oversupply concerns are still present. Australian retail sales showed a 0.4% uptick versus the projected 0.3% gain while the trade deficit narrowed from 3.04 billion AUD to 2.16 billion AUD, driven by a 4% gain in exports. 

By Kate Curtis from Trader's Way