Forex Major Currencies Outlook (November 6, 2013)

The index climbed from 54.4 to 55.4 in October instead of dipping to the estimate at 54.2. This shows that the services sector had a stronger expansion for the month, which spells good prospects for growth and employment. For today, only medium-tier data such as the Challenger job cuts and CB leading index are up for release, both of which are not expected to have significant impact on the dollar’s movement. 

EUR

The euro made a bit of headway to the dollar in the Asian and London sessions but gave up its gains when the US session rolled along. Spain’s unemployment change report was worse than expected, as the country posted a 87K increase in joblessness versus the estimate of a 31K rise. Aside from that, the European Commission downgraded their growth and employment forecasts for the entire region, prompting many to speculate that the central bank could boost liquidity in their upcoming rate decision. Spanish and Italian services PMIs are due today, along with German factory orders and euro zone retail sales. Another round of weak data could spark more rate cut or LTRO expectations, which could lead to a deeper euro selloff. 

GBP

The pound was able to stay above the 1.5950 support level against the dollar when the UK printed a better than expected services PMI reading. The report showed an improvement from 60.3 to 62.5, outpacing the consensus at 60.4. Manufacturing and industrial production are due today and these should determine whether the pound can keep up its rallies or not. 

CHF

The franc gave up most of its recent gains to the dollar in yesterday’s trading as Switzerland’s CPI came in weaker than expected. The report printed a 0.1% drop in consumer price levels instead of the projected 0.1% uptick. There are no reports due from Switzerland today so it could be all about risk sentiment and US data driving USD/CHF. 

JPY

The yen had a mixed performance yesterday, as it gained against the euro but consolidated against the pound. There were no major reports released from Japan and the freshly released BOJ meeting minutes contained no surprises. Japan is set to hold its 10-year bond auction in a few hours and this might result to volatility among yen pairs if bond yields spike. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls regained ground yesterday on news that China was pumping liquidity again. Aside from that, data from New Zealand turned out better than expected, as the economy showed a 1.2% increase in employment for the third quarter of the year. Australia released a smaller than expected trade deficit of 0.28 billion AUD versus the estimated 0.51 billion AUD. Later on, Canada will print its Ivey PMI and possibly show an improvement from 51.9 to 54.7. 

By Kate Curtis from Trader's Way