Forex Major Currencies Outlook (Oct 8, 2014)

Data from the US economy was mixed, as the JOLTS job openings came in stronger than expected while the IBD/TIPP economic optimism index fell short of estimates. Biases from FOMC officials who gave speeches were also mixed, discouraging traders from piling on their long dollar trades ahead of today’s FOMC minutes release. Indications that the Fed is seriously considering an exit strategy to be implemented soon might lead to more dollar gains.

EUR

The euro struggled to edge higher against its forex counterparts, despite weaker than expected data from Germany. The country’s industrial production report marked a 4.0% decline, worse than the projected 1.4% drop, while the previous month’s reading was downgraded to show a smaller increase. There are no reports due from the euro zone today.

GBP

The pound was unable to advance further in recent trading as UK manufacturing production came in weaker than expected. The report showed a mere 0.1% uptick instead of the projected 0.2% increase, slower than the previous 0.3% gain. Industrial production stayed flat in the same period. UK Halifax HPI is up for release today and it might show a 0.2% uptick, with weaker than expected data likely to weigh further on the pound.

CHF

The franc edged higher against the euro and the dollar recently, despite mixed data from Switzerland. The CPI showed a small 0.1% uptick instead of the projected 0.2% increase in price levels, reminding that deflation could still be a concern in the country. However, the retail sales report showed a strong 1.9% rebound while the previous figure was upgraded to show a smaller decline. Swiss jobless rate is due today and an improvement from 3.2% to 3.1% is eyed.

JPY

The yen regained strength to most of its major counterparts, particularly the dollar and the Kiwi. The BOJ decided to keep policy unchanged as expected, but cited weakness in production due to the sales tax hike. Earlier today, Japan’s current account balance came in weaker than expected as it saw a smaller surplus. The BOJ Monthly Report and Economy Watchers sentiment index is due today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls struggled to recover in recent trading but were unable to take advantage of dollar weakness. The RBA decided to keep rates unchanged at 2.50% as expected, although they mentioned that hiring has been unusually volatile and that house prices remain a concern. Canadian building permits was weaker than expected at -27.3% versus the projected 6.0% drop while the previous data was downgraded. Canadian housing starts is up for release later and another weak reading might lead to a Loonie selloff.

By Kate Curtis from Trader's Way