Forex Major Currencies Outlook (October 25, 2013)

USD/JPY is stalling above the 97.00 mark, as though waiting for a larger catalyst for a breakout in either direction. Yesterday’s set of reports printed weak results as the trade balance was better than expected but the flash manufacturing PMI and initial jobless claims were both below consensus. The trade deficit narrowed to 38.8 billion USD, reflecting an improvement in export activity. The flash manufacturing PMI slipped from 52.8 to 51.1 in the current month, which means that the industry expansion was slower in October. Meanwhile, jobless claims came in at 350K, slightly higher than the expected 343K reading. US durable goods orders data are up for release today and the core figure is expected to show a 0.6% uptick while the headline figure could print a 1.7% increase. 

EUR

The euro was unable to make significant headway past the 1.3800 handle against the U.S. dollar, as most of the PMI figures from Germany and France came in below expectations. French flash manufacturing PMI even printed a contraction for the month, as the reading fell from 49.8 to 49.4 instead of improving to 50.3. German flash services PMI was weaker than expected at 52.3 versus the expected rise to 53.8 while the previous month’s figure was revised down to 53.7. For today, German Ifo business climate data is due and an improvement from 107.7 to 108.2 is eyed. 

GBP

The pound was sold off against most of its counterparts yesterday, as the CBI industrial order expectations came in much weaker than expected. The report printed a surprisingly downbeat -4 reading versus the consensus of an improvement from 9 to 10. UK preliminary GDP for Q3 2013 is up for release today and a downside surprise might be in the cards, given the recent disappointment in PMI figures. A growth figure of 0.8% is expected for the period. 

CHF

The lack of data prevented the franc from extending its gains against the US dollar yesterday, as USD/CHF was stuck above the .8900 major psychological level. There are still no reports due from Switzerland today, as US data could dictate whether the pair would break down or make a quick bounce. Watch out for the release of the US durable goods orders data during the New York session if you’re waiting for this pair to pick a direction. 

JPY

The yen also had a mixed performance similar to the dollar yesterday, as USD/JPY was stuck in consolidation while comdolls gave up ground to the Japanese currency. There were no reports released from Japan then but earlier today, the CPI figures fell short of expectations. Tokyo printed a 0.3% uptick in core price levels, lower than the estimated 0.4% increase, while the national core CPI was at 0.7%. 

Commodity Currencies (AUD, NZD, CAD)
Comdolls gave up more ground to the dollar and the yen as risk remained off yesterday. Better than expected Chinese flash manufacturing PMI was not enough to keep the Aussie and Kiwi supported, while the Loonie chalked up more losses because of the recent growth downgrades from the BOC. There are no reports due from the comdoll economies today so it should be all about risk sentiment driving price action. 

By Kate Curtis from Trader's Way