Forex Major Currencies Outlook (January 10, 2014)

The only data printed was the initial jobless claims report, which came in stronger than expected at 333K versus the estimate at 337K. However, the previous month’s reading was revised higher to 345K. Up ahead, the much anticipated NFP report is up for release and it could show a 196K increase in hiring, enough to keep the jobless rate steady at 7.0%. A stronger than expected figure might boost the US dollar.

EUR

The euro tried to hold steady against the US dollar in yesterday’s trading, despite remarks from Draghi that further easing might be necessary. There were no actual changes to monetary policy or interest rates during the ECB rate statement. For today, French industrial production and euro zone final GDP are up for release. Further signs of weakness could push the euro lower against its counterparts.

GBP

The pound managed to hold on to its recent levels after the BOE decided to keep interest rates and asset purchases unchanged despite a few signs of a slowdown in the UK. UK manufacturing production is up for release today and another 0.4% uptick is eyed, but a weaker than expected reading could erase some of the pound’s gains.

CHF
There were no reports released from Switzerland yesterday, which was why the franc continued to cave under dollar strength. For today, CPI is up for release and a 0.1% decline in price levels is eyed after the flat reading in the previous month. A sharper decline in inflation might be negative for the franc as it could give the central bank room to ease.

JPY

The yen put up a good fight yesterday despite the lack of major reports from Japan. Today, the leading indicators index is up for release and might show a small improvement, which might be positive for yen pairs and the Nikkei. No other reports are due from Japan so watch out for any potential changes in market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Canadian dollar carried on with its losing streak to the dollar as the Canadian building permits showed another weaker than expected reading of -6.7% instead of just -2.3%. Canadian jobs data is up for release today and further signs of weakness could push USD/CAD past 1.0900. As for the Australian dollar, it is currently testing a major support level to the dollar while Chinese data has increased the downside pressure. China’s trade balance came in below consensus and reflected a slowdown in trade. As for New Zealand, there has been no major data on tap, keeping NZD/USD in a range.

By Kate Curtis from Trader's Way