Forex Major Currencies Outlook (October 30, 2013)

Data from the US was mostly weaker than expected, as the headline retail sales figure showed a 0.1% decline while the core report showed a 0.4% increase. CB consumer confidence chalked up a very sharp drop in October because of the government shutdown, as the reading fell from 80.2 to 71.2. The FOMC is set to announce its monetary policy decision today and no changes are expected, as the recent downturn in the economy isn’t likely to convince the Fed to taper. Also due today is the ADP non-farm employment change which could elicit a similar reaction to the NFP release. 

EUR

The euro finally broke out of its consolidation to the dollar yesterday but, unfortunately for the shared currency, the breakout was to the downside. There were no major reports released from the euro zone yesterday so the euro was weighed down by risk aversion. For today, a bunch of medium-tier reports from individual euro zone economies are up for release. Germany is set to report its unemployment change figure and possibly report a small increase in joblessness of 1K versus the previous 25K reading. Meanwhile, Spain is expected to exit its recession with 0.1% growth for the third quarter of the year. 

GBP

The pound continued to slide lower against the US dollar in yesterday’s trading as risk-taking was kept at bay. Data from the UK was actually stronger than expected, as both net lending to individuals and mortgage approvals printed higher than estimated results, but these weren’t enough to provide support for the pound. There are no reports due from the UK today so it could be mostly market sentiment that would drive pound price action. 

CHF

The franc was unable to make any headway past the US dollar in yesterday’s trading, as USD/CHF pulled up to the .9000 major psychological level. There were no reports released from Switzerland yesterday, which explains why the franc was unable to put up a good fight. For today, the UBS consumption indicator and KOF economic barometer are up for release and improvements could be enough to push USD/CHF back in selloff mode. 

JPY

The yen edged a little higher against its rivals yesterday when risk aversion provided support for the lower-yielding currency. At the same time, Japan printed better than expected household spending and retail sales figures. Earlier today though, industrial production missed the consensus of a 1.8% increase and posted a mere 1.5% rise. The previous figure was also revised down to show a 0.9% decline. No other reports are due from Japan today so the yen might be sensitive to risk flows once more. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls were once again victim of risk aversion, as they extended their losing streak to the dollar. However, the Loonie’s losses were a little more subdued even though medium-tier inflation reports from Canada were weak. Australia reported a strong 6.4% increase in HIA new home sales in today’s Asian session while the RBNZ is gearing up to make its interest rate decision in the next Asian session. Pricing in of expectations for downbeat remarks could weigh on the Kiwi for today though. 

By Kate Curtis from Trader's Way