Forex Major Currencies Outlook (January 24, 2014)

The flash manufacturing PMI slipped from 54.4 to 53.7 instead of improving to the estimated 55.2 reading. Existing home sales came in at 4.87M instead of the consensus at 4.94M while the previous month’s reading was revised down. The only report that came in better than expected was the initial jobless claims data, which showed a 326K reading instead of the estimated 331K figure. There are no reports lined up from the US economy today.

EUR

The euro continued to rally against its major counterparts in the London and US sessions, as the euro zone PMIs came in stronger than expected. French manufacturing and services PMIs both beat expectations and showed slower contraction in the industries while German PMIs reflected stronger expansion. Overall, the region’s manufacturing and services PMIs also beat expectations and reflected industry expansion. Euro zone consumer confidence also came in better than expected and improved from -14 to -12. Only the Italian retail sales and Belgian NBB business climate data are up for release today.

GBP

The pound continued its rallying ways in yesterday’s trading, despite weaker than expected CBI realized sales. The reading fell from 34 to 14, lower than the estimate at 28, reflecting lower sales volume. BBA mortgage approvals are up for release today and a good reading might push the pound higher up the charts.

CHF

The franc regained ground against the US dollar and the euro in yesterday’s trading although there were no reports released from Switzerland. Their calendar is still empty for today, which suggests that franc movement might continue to depend on risk sentiment.

JPY

The yen was a big winner in yesterday’s trading, as the Japanese currency took advantage of the surge in risk aversion. There have been no major reports released from Japan yesterday and none are due today, which means that yen pairs could keep reacting to market sentiment.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar gave up ground again in yesterday’s trading, as China’s HSBC manufacturing PMI fell back in the contractionary zone. The reading dipped from 50.5 to 49.6 instead of improving to 50.6 while the CB leading index posted a weak increase of 0.4% compared to the previous reading. Over in Canada, the retail sales report printed upside surprises for both core and headline figures. Canadian core and headline CPI are up for release today and these might have a huge impact on Loonie movement since the BOC has spoken of weak inflation.

By Kate Curtis from Trader's Way