Forex Major Currencies Outlook (Sep 07, 2017)

Data from the US economy was mixed as the ISM non-manufacturing PMI advanced from 53.9 to 55.3, short of the estimate at 55.8, while the trade balance showed a narrower than expected deficit of $43.7 billion. Only low-tier reports are due today so market sentiment and political updates could be the main driver of dollar price action. 

EUR 

The euro was still in a weak spot as medium-tier reports came in weaker than expected. German factory orders fell 0.7% versus the projected 0.2% uptick while the region's retail PMI fell from 51.0 to 50.8. Italian retail sales posted a 0.2% dip as expected. German industrial production and French trade balance are due today but the market attention could be focused on the ECB statement. No actual policy changes are expected but traders are hoping to get more clues on asset purchases tapering. 

GBP 

The pound was able to stay afloat on profit-taking ahead of the second reading of the EU repeal bill. There were no reports out of the UK economy yesterday while today has the Halifax HPI lined up. Analysts are expecting to see a 0.2% increase in house prices, short of the estimated 0.4% gain.

CHF 

The franc regained some ground as bears probably booked profits off their earlier short positions when GDP missed expectations. Today has foreign currency reserves due and a significant increase over the earlier 714B CHF reading could revive speculations of SNB intervention, likely pushing the franc back down. 

JPY 

The yen gave back some of its recent wins as risk sentiment appeared to improve while North Korean missile threats no longer dominated market headlines. Japanese average cash earnings missed estimates with a 0.3% drop instead of the estimated 0.5% gain. Only the leading indicators is due today and a dip from 105.9% to 105.2% is expected. 

Commodity Currencies (AUD, NZD, CAD) 

The Loonie enjoyed a strong rally after the BOC surprised with another interest rate hike to 1.00% instead of holding steady at 0.75%. Canadian data also came in stronger than expected as the trade deficit narrowed from 3.8 billion CAD to 3.0 billion CAD while labor productivity dipped 0.1% to put upside pressure on wages. Australian trade balance and retail sales are due next and strong figures could boost the Aussie as well. Canadian Ivey PMI, US crude oil inventories, and New Zealand quarterly manufacturing sales are due later in the day. 

By Kate Curtis from Trader's Way