Forex Major Currencies Outlook (Oct 15, 2014)

Risk sentiment provided support for the safe-haven currency, which is also starting to advance against the commodity currencies and is taking advantage of the decline in commodity prices. For today, US retail sales data is due, with the headline figure likely to post a 0.1% decline and the core reading estimated to print a 0.2% uptick. An upside surprise might lead to more demand for the US currency.

EUR

The euro suffered another wave of selling to its counterparts, as Germany showed a bleak ZEW economic sentiment figure. The reading fell from 6.9 to -3.6 instead of just dipping to 0.2, indicating that the outlook has worsened significantly. In the euro zone region, the ZEW economic sentiment reading is down from 14.2 to 4.1, lower than the projected 7.1 figure. For today, ECB Governor Draghi’s testimony might dictate euro price action.

GBP

The pound gave up its recent gains to its counterparts when the UK CPI came in much weaker than expected, casting doubts on whether the BOE can afford to tighten next year or not. The headline reading dropped from 1.5% to 1.2%, lower than the projected 1.4% figure, while the core CPI slipped from 1.9% to 1.5%. UK jobs data is up for release today and another disappointment might push pound pairs much lower. The claimant count change is projected to show a 34.2K decline while the jobless rate is slated to improve from 6.2% to 6.1%.

CHF

The franc weakened to its counterparts once more as Swiss PPI highlighted deflationary concerns in the country. The reading showed a 0.1% drop in producer prices, following the previous 0.2% decline and worse than the projected 0.3% rebound. Apart from that, weak euro zone data also weighed on the franc as the prospect of more ECB easing also ups the odds for SNB intervention or negative deposit rates. There are no reports due from Switzerland today.

JPY

The yen took advantage of the run in risk aversion recently, advancing to most of its higher-yielding counterparts. There have been no major reports released from Japan then and none are due today, leaving risk sentiment in the driver’s seat. Weak data from major economies and continued geopolitical risk could keep higher-yielding currencies weaker against the lower-yielding yen.

Commodity Currencies (AUD, NZD, CAD)

Comdolls chalked up massive losses recently, particularly the Canadian dollar which fell victim to weaker oil prices. Earlier today, the Chinese CPI report came in weaker than expected and put more pressure on the Aussie and Kiwi. The GDT index from New Zealand is up for release in the dairy auction today, with another decline likely to push the Kiwi lower. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way