Forex Major Currencies Outlook (March 24, 2014)

Data from the US was relatively light for the day, with a few FOMC officials supporting the positive outlook for the economy. Only the flash manufacturing PMI is up for release from the US today and this isn’t expected to make a huge impact on dollar movement. Do keep close tabs on the economic sanctions being imposed by the US on Russia as these could impact overall risk sentiment.

EUR

The euro recovered a bit against the dollar on Friday, thanks to a better than expected current account balance from the euro zone. The surplus widened from 20.0 billion EUR to 25.3 billion EUR. Germany and France are set to print their manufacturing and services PMIs today and these could determine whether the euro selloff would resume or not. Most of the figures are expected to show small improvements, although the readings could still reflect contraction in the industries.

GBP

The pound was unable to bounce back on Friday, as the public sector net borrowing report showed that the government incurred a 7.5 billion GBP deficit. There are no major reports lined up from the UK today so pound pairs might be in for a bit of consolidation, as traders wait for the UK CPI to be released later on this week.

CHF

The franc rebounded on Friday, taking advantage of profit taking by most market participants. There were no reports released from Switzerland then and none are due today, which might mean a bit of sideways movement for both USD/CHF. As for EUR/CHF, the price action might hinge on the euro zone PMI releases.

JPY

The yen bounced back to action on Friday, as risk sentiment favored the lower-yielding Asian currency. However, Japanese traders were on holiday then and there were very little cues from Asian equities. Japan’s banks resume operation today and it will be interesting to see how the recent sanctions imposed by the US on Russia will be priced in the Nikkei and yen pairs. No economic reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a bit of bounce on Friday, most notably the Loonie. The Canadian currency drew a lot of support from stronger than expected economic data, as retail sales and CPI all came in higher than estimates. Core CPI showed a 0.7% increase while the headline figure printed a 0.8% uptick. Core retail sales had a 1.0% rise while headline retail sales made a 1.3% jump. There are no reports due from Canada today but in the Asian session, China’s HSBC flash manufacturing PMI printed a weaker than expected 48.1 reading which weighed on the Aussie.

By Kate Curtis from Trader's Way