Forex Major Currencies Outlook (Feb 19, 2015)

As it turns out, the report was less hawkish than expected, as some policymakers expressed concerns about hiking rates too soon. The minutes also indicated that the Fed is worried about external risks stemming from the downturn in China, the financial uncertainty in Greece, and the tensions in the Middle East and Ukraine. Data from the US was also mostly weaker than expected, as PPI figures and data on building permits missed expectations. The US Philly Fed index is up for release today and an improvement from 6.3 to 8.8 is expected.

EUR

The euro managed to advance against the dollar but it was still in a weak spot compared to its other currency counterparts. Rumors that the Greek government would pursue a 6-month loan extension lifted the shared currency for a while but the EU said that no proposal has been passed. Only medium-tier reports are due from the euro zone today, leaving market participants to focus on the ECB meeting minutes and any developments on the Greek debt situation.

GBP

The pound managed to extend its recent gains when the UK posted another set of stronger than expected jobs data. Claimant count dropped by 38.6K in January, better than the estimated 25.2K drop in joblessness. This pushed the jobless rate down from 5.8% to 5.7% while average earnings improved from 1.8% to 2.1%. Meanwhile, the BOE minutes revealed a unanimous vote to keep interest rates and asset purchases unchanged. Only the CBI industrial orders expectations report is up for release today.

CHF

The franc saw a bit of action against the dollar while continuing to move gradually lower against the euro and the pound. Swiss ZEW economic expectations tumbled from -10.8 to -73.0, indicating that pessimism has worsened. The Swiss trade balance is up for release today and a smaller surplus is eyed.

JPY

The Japanese yen advanced against most of its major counterparts when the BOJ refrained from announcing any monetary policy changes. Governor Kuroda even upgraded their assessment and outlook for exports and output, reminding market participants that the Japanese economy continues to recover. Earlier today, Japan’s trade balance marked a smaller than expected deficit.

Commodity Currencies (AUD, NZD, CAD)

The comdolls chalked up small gains to the dollar in recent trading but the Kiwi erased some of its wins when the PPI figures came in mixed. Producer input prices showed a worse than expected 0.4% drop while output prices marked a smaller than expected 0.1% decline. There are no reports lined up from the comdoll economies today.

By Kate Curtis from Trader's Way