Forex Major Currencies Outlook (August 11, 2014)

Data from the US was mostly weaker than expected, as preliminary unit labor costs and non-farm productivity both fell short of consensus. There are no reports due from the US today, as the only event risk for the dollar is FOMC member Fisher’s speech during the New York session.

EUR

The euro bounced against the dollar and some of its major counterparts on Friday, although data from the euro zone was mixed. Germany printed a weaker than expected trade surplus of 16.2 billion EUR versus the estimated 19.8 billion EUR and the previous 18.8 billion EUR. French industrial production came in better than expected though, as the report marked a 1.3% gain for June while the May figure was upgraded. There are no reports lined up from the euro zone today.

GBP

The pound continued its decline against its counterparts when the UK trade balance came in below expectations. The deficit widened from 9.2 billion GBP to 9.4 billion GBP instead of narrowing to the estimated 8.9 billion GBP shortfall. Only the CB leading index is up for release from the UK today and it might show a decline for the month of July, which might lead to more pound weakness.

CHF

The franc gave up some ground to the dollar at the end of the week as there were no reports to support the Swiss currency on Friday. For today, Swiss retail sales data is up for release and it might show a 0.7% rebound from the previous 0.6% decline. Stronger than expected data could lead to more gains for the franc while weak results could push it lower against its counterparts.

JPY

The yen showed signs of weakness at the end of the trading week, as data from Japan continued to fall short of expectations and lead to speculations that further easing will be implemented. Although the BOJ didn’t make any changes to policy just yet, their statement indicated that they are expecting to see more weakness in terms of exports. Earlier today, Japan’s tertiary industry activity index marked a 0.1% decline instead of showing the estimated 0.2% uptick. The BOJ monthly report and data on preliminary tool machinery orders are up for release.

Commodity Currencies (AUD, NZD, CAD)
Canada followed the trend of weak data from Australia and New Zealand, as its employment report marked a mere 0.2K increase in hiring instead of the estimated 25.4K gain. The jobless rate improved from 7.1% to 7.0% as the participation rate declined. Over the weekend, Chinese CPI came in line with expectations at 2.3% while the PPI marked a 0.9% drop. Data on Canada’s housing starts is due later today.

By Kate Curtis from Trader's Way.