Forex Major Currencies Outlook (Sept 10, 2014)

There have been no major reports from the US, allowing traders to take profits off their recent euro shorts and trade mostly based on risk sentiment. For today, wholesale inventories and crude oil inventories are due from the US, both of which aren’t likely to have a material impact on price action once more. Bear in mind though that US President Obama is scheduled to announce the US government’s plan on ISIS and might lead to volatility during the US session.

EUR

The euro recovered off its recent lows to most of its major counterparts, as traders booked profits from their short positions. Data from the euro zone has been weaker than expected, as France reported a wider trade deficit of 5.5 billion EUR. French non-farm payrolls and industrial production data are due today, along with the German 10-year bond auction. Weak data could push the euro lower again, as traders seek to enter short positions on better prices.

GBP

 The pound continued to sell off to the dollar but was able to bounce back against some of its forex counterparts when BOE Governor Carney announced that they might hike rates by spring next year. However, the reaction has been limited since traders are starting to doubt that the UK economy can recover by then. UK trade balance was weaker than expected with a wider deficit of 10.2 billion GBP. Today has the BOE inflation report hearings on tap and more hawkish remarks could add support to the pound.

CHF

 The franc bounced back to action in recent trading, despite the lack of top-tier data from Switzerland. Traders are still expecting the SNB to take action as EURCHF approaches its floor but the lack of resolve has allowed some to take profits of their short franc positions. There are no reports due from Switzerland today, leaving the franc sensitive to euro movements and risk sentiment.

JPY

 The yen had a mixed performance as it acted more as a counter currency in recent trading. Data from Japan has still been weak, with core machinery orders showing a weaker than expected 3.5% gain versus the estimated 4.1% rise and PPI hinting at a slowdown in price pressures. Tertiary industry activity had a flat reading, prompting many to speculate about further BOJ easing. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

 The comdolls gave up ground to the dollar when risk sentiment weighed on the markets and data from Australia and Canada disappointed. NAB business confidence in Australia slipped from 10 to 8 while home loans showed a weaker than expected 0.3% uptick. In Canada, housing starts fell from 200K to 192K. The RBNZ is set to make its monetary policy statement in the upcoming Asian trading session and might lead to Kiwi weakness if the bias turns dovish.

By Kate Curtis from Trader's Way