Forex Major Currencies Outlook (May 1, 2014)

The advanced GDP reading for the first quarter of 2014 turned out to be a disappointment as the economy clocked in a mere 0.1% growth figure, down from the previous 2.6% GDP reading. However, the FOMC statement turned things around as the committee voted unanimously to taper asset purchases. Their economic assessment and outlook was relatively upbeat this time, leading many to believe that easing could end in December this year. Initial jobless claims and ISM manufacturing PMI are up for release today but the bigger mover could be Yellen’s speech during the US session.

EUR

The euro managed to survive against the dollar in recent trading as CPI data wasn’t as bad as expected. Aside from that, German jobs data showed strong results as hiring increased by 25K versus the 10K estimate. Spain logged in a 0.4% GDP figure, just in line with market expectations. There are no reports due from the euro zone today as banks are closed on Labor Day.

GBP

The pound extended its rallies to its major counterparts in recent trading, as GBP/USD climbed to the 1.6900 mark. There were no reports released from the UK then and only the Nationwide HPI and manufacturing PMI data are the reports to watch out for today. Manufacturing PMI is expected to dip from 55.4 to 55.3, but a stronger than expected reading could push GBP/USD much higher.

CHF

The franc made a bit of recovery to the dollar in yesterday’s trading as the UBS consumption indicator climbed from 1.52 to 1.84, indicating a pick up in spending. There are no reports due from Switzerland today as banks are also closed on a Labor Day holiday.

JPY

The yen advanced against the dollar but stayed stuck in consolidation to most of its major counterparts, as risk sentiment remained stable in recent trading and the BOJ refrained from making any changes in monetary policy. There are no reports lined up from Japan in today’s Asian session but do watch out for the release of the jobless rate and household spending data in the next Asian session.

Commodity Currencies (AUD, NZD, CAD)

The Aussie and Kiwi recovered in recent trading while the Loonie was stuck in consolidation to the dollar. There were no major reports released from these economies recently, although Canada reported a 0.2% monthly GDP growth in line with expectations. Underlying inflation reports from Canada were weaker than expected, preventing the Loonie from taking part in the risk rallies. There are no major reports lined up from Australia, New Zealand, or Canada today.

By Kate Curtis from Trader's Way