Forex Major Currencies Outlook (February 20, 2014)

Data from the US has actually been mostly weak, with building permits showing a 0.94 million figure instead of the estimated 0.98 million reading. Headline and core PPI both came in line with consensus, showing 0.2% upticks, while housing starts also disappointed. Up ahead, the US CPI figures are due along with the initial jobless claims and Philly Fed index. Another round of disappointing data could force the Greenback to return some of its recent gains.

EUR

The euro struggled to keep up its rallies in yesterday’s trading sessions when the euro zone didn’t release any economic reports. For today, German and French manufacturing and services PMIs are up for release and this might be crucial in determining whether the euro can hold on to its recent gains or start a selloff. Most of the PMIs are expected to show improvements, enough to boost the region’s manufacturing and services PMIs.

GBP

The pound let go of its recent wins when the jobs data came in mixed. The economy added 27.6K jobs in January but the jobless rate ticked up from 7.1% to 7.2%, a couple of notches away from the BOE’s jobless rate target. The BOE meeting minutes showed a unanimous vote to keep monetary policy unchanged and triggered a quick bounce for pound pairs when Carney’s hawkish comments were echoed by most policymakers. Only the CBI industrial order expectations are due from the UK economy today and this might not have much of an impact on the pound.

CHF
The franc paused from its recent rallies as Switzerland’s ZEW economic expectations report showed a decline from 36.4 to 28.7. Only the trade balance is up for release today and a wider trade surplus is projected, which might be enough to support the franc against the euro and the dollar. Otherwise, a sharper selloff might be in the cards as this would force the SNB to jawbone the franc later on.

JPY

The yen had a mixed performance in recent trading as there were no major reports released from Japan, leaving the currency vulnerable to market sentiment. There are still no major reports lined up for today, which suggests that the yen’s movement could still depend on the market’s risk preferences.

Commodity Currencies (AUD, NZD, CAD)
The comdolls suffered a fresh wave of losses in recent trading as most data came in weak. Canada’s foreign securities purchases showed a surprise deficit while New Zealand’s quarterly PPI figures posted declines instead of the estimated upticks. Earlier today, China released a weak HSBC flash PMI reading and showed a deeper contraction in the industry, pushing AUD pairs lower. No other reports are due from the comdolls today so much could depend on risk sentiment.

By Kate Curtis from Trader's Way