Forex Major Currencies Outlook (Jan 27, 2017)

A list of infrastructure priority projects has been compiled and equities seem to be cheering the prospect of fiscal stimulus, tax reform, and financial deregulation. US advanced GDP data is due today and a slower growth figure of 2.1% is eyed. Durable goods orders data is also due. 

EUR

The euro gave up some ground to the dollar and its other rivals even though data came in mostly stronger than expected. The German GfK consumer climate index advanced from 9.9 to 10.2 versus the 10.0 consensus and Spain reported an improvement in its jobless rate. However, Italy's retail sales report printed a surprise 0.7% drop versus the projected 0.1% uptick. There are no major reports due from the euro zone today. 

GBP

The pound continued to advance against most of its peers as traders seem hopeful about a bilateral trade deal between the UK and the US ahead of Prime Minister May's trip to Washington. In that case, this could reassure businesses that activity can stay supported even if they wind up giving up access to the single market. UK preliminary GDP also came in stronger than expected with 0.6% growth, keeping investors confident that the UK economy is staying resilient. There are no reports due from the UK today. 

CHF

The franc finally broke out of its consolidation against the euro even while consolidating to the pound and dollar. Swiss trade balance was weaker than expected at a smaller 2.71 billion CHF surplus compared to the estimated 2.81 billion CHF surplus. There are no reports due from the Swiss economy today. 

JPY

The yen gave up ground against its peers as the BOJ pursued moves to target the yield curve. Policymakers have decided to make bond-buying adjustments in order to flatten the yield curve in reaction to changing US bond yields. Inflation reports came in better than expected as the Tokyo core CPI printed a 0.3% dip versus the projected 0.4% drop while the national core CPI showed a 0.2% decline versus the projected 0.3% tumble. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave back some of their gains to the dollar but the Loonie managed to edge higher on expectations of rising oil prices and a pickup in the Canadian energy sector due to the Keystone XL pipeline construction. Inflation data from Australia was mixed as import prices rose 0.2% versus 0.4% while PPI was up 0.5% versus 0.2%. Chinese banks are closed for the Spring Holiday today. 

By Kate Curtis from Trader's Way