Forex Major Currencies Outlook (Jan 09, 2018)

The S&P and Nasdaq continued their push for another round of record highs but the Dow closed in the red. FOMC members Bostic and Williams shared their views on the economy and warned of potentially weaker inflation weighing on rate hike prospects. Credit card spending leading up to the Thanksgiving holidays buoyed debt up from $20.5 billion to $28 billion in November while auto and student loans also ticked higher. Only medium-tier reports such as the NFIB Small Business index and JOLTS job openings data are due from the US today. 

EUR 

The euro returned most of its recent gains as traders worried about more words of caution in the ECB minutes due later in the week. Recall that the central bank upgraded their growth forecasts then but the announcement was seen as less hawkish than expected since it didn't contain much rate hike clues. Data from the region was actually stronger than expected, with retail sales up 1.5% versus 1.4% and the Sentix investor confidence up from 31.1 to 32.9 versus the consensus at 31.5. 

GBP 

The pound was able to hold its ground as the UK government started its cabinet reshuffle to strengthen its Brexit position. The Halifax HPI was weaker than expected with a 0.6% drop in prices versus the estimated 0.2% uptick while the BRC retail sales monitor posted another 0.6% gain. There are no other major reports from the UK today. 

CHF 

The franc weakened to most of its peers as risk-taking was in play during the latter trading sessions. Swiss CPI came in flat instead of posting the estimated 0.1% dip. Swiss jobless rate, foreign currency reserves, and retail sales are all due today and strong readings could also spur tightening expectations from the SNB. 

JPY 

The yen was in a weak spot as risk-taking came into play during the latter trading sessions. Japanese average cash earnings turned out stronger than expected with a 0.9% gain versus the projected 0.6% increase but the earlier figure was downgraded. The Japanese consumer confidence index is due next and a rise from 44.9 to 45.1 is eyed. 

Commodity Currencies (AUD, NZD, CAD) 

The Loonie was the strongest of the bunch as it enjoyed a strong boost from the BOC Business Outlook Survey. Policymakers projected more sales activity but with some moderation, also highlighting the pickup in hiring and price levels. Australia's building approvals also beat expectations with a 11.7% gain versus the estimated 0.9% drop. Canadian housing starts data is due next. 

By Kate Curtis from Trader's Way