Forex Major Currencies Outlook (Apr 23, 2015)

Existing home sales from the US economy was better than expected, as the reading showed a pickup from 4.89 million to 5.19 million. For today, new home sales, initial jobless claims, and the flash manufacturing PMI are due. Stronger than expected data could allow the dollar to extend its gains while weak results could cast more doubts on the Fed rate hike prospects for this year.

EUR

The euro resumed its slide to most of its major counterparts, as traders started reducing their positions ahead of the Eurogroup meetings later this week. Data from the euro zone was also weaker than expected, as the consumer confidence index slumped from -4 to -5 while Italian retail sales missed the mark. Euro zone PMI readings are up for release today and strong improvements in the manufacturing and services sectors of Germany and France could give the shared currency a boost.

GBP

The pound popped higher after the BOE meeting minutes were released since it revealed that policymakers were not as dovish as expected. Members voted unanimously to keep policy unchanged while citing their positive outlook for inflation later on this year. This marked a shift from their previous bias indicating that pound strength could push price levels much farther away from their inflation target. UK retail sales and public sector net borrowing data are up for release today.

CHF

The franc sold off sharply after the SNB announced that it would be reducing exemptions for institutions being charged negative deposit rates. This means that the Swiss central bank will be slapping on more costs for banks who keep cash parked in the central bank’s vaults, which suggests that they’re hoping to boost lending activity. Switzerland’s trade balance is due today and a smaller surplus is eyed.

JPY

The yen was functioning as a counter currency in recent trading, thanks to the lack of top-tier data from Japan. Earlier today, the flash manufacturing PMI was released and it showed a drop from 50.3 to 49.7, indicating industry contraction. No other reports are lined up from Japan, leaving the yen sensitive to risk flows.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi suffered a sharp blow in today’s Asian trading session when an RBNZ official clarified that they’re not looking to hike rates anytime soon. He pointed out that the inflation outlook remains subdued and that they might even cut rates if needed. Wholesale sales in Canada was weaker than expected with a 0.4% decline but it wasn’t enough to dull the Loonie’s shine. In China, the flash manufacturing PMI dipped from 49.6 to 49.2, reflecting a sharper contraction.

By Kate Curtis from Trader's Way