Forex Major Currencies Outlook (Dec 22, 2017)

The final GDP reading for Q3 was downgraded from 3.3% to 3.2% while initial jobless claims also printed weaker than expected results. On the flip side, the Philly Fed index jumped from 22.7 to 26.2 versus the 21.5 forecast. The core PCE price index, along with personal spending and income data, are due today. 

EUR 

The euro returned some of its recent wins as there were no major reports from the region. The consumer confidence index ticked up from 0 to 1 instead of holding steady to reflect stronger optimism. German GfK consumer climate and French consumer spending figures are due next, and strong results could reinforce hawkish ECB expectations. 

GBP 

The pound consolidated to the yen and dollar while giving up ground to the commodity currencies. UK public sector net borrowing came in slightly better than expected at 8.1 billion GBP versus 8.3 billion GBP. Today has the current account balance and final GDP reading on tap, although traders' attention seems to be fixed on Brexit updates. 

CHF 

The franc had a mixed run as it mostly reacted to currency-specific factors. Swiss trade balance was weaker than expected at a surplus of 2.63 billion CHF versus the consensus at 2.84 billion CHF but still larger than the earlier 2.45 billion CHF surplus. The KOF economic barometer is due next but no changes to the 110.3 figure are eyed. 

JPY 

The yen was in a weak spot after the BOJ decision as the central bank kept monetary policy unchanged. Although this was widely expected, traders seemed disappointed that Governor Kuroda didn't have much to say on the "reversal rate" or unwinding of stimulus. Risk-taking was also bearish for the lower-yielding currency, along with global bond yields. 

Commodity Currencies (AUD, NZD, CAD) 

The Loonie was one of the strongest performers of the day thanks to upbeat CPI and retail sales figures from Canada. Headline CPI rose 0.3% versus the 0.2% consensus while headline retail sales jumped 1.5% versus the 0.3% estimate, reviving hopes for more BOC hikes. Canada's monthly GDP is up next and a 0.2% expansion is eyed. 

By Kate Curtis from Trader's Way