Forex Major Currencies Outlook (May 16, 2014)

The Empire State manufacturing index showed a large improvement from 1.3 to 19.0, outpacing the consensus at 5.5, while the Philly Fed index dipped from 16.6 to 15.4 instead of falling to 13.9. Industrial production slipped by 0.6% even as analysts predicted a 0.4% uptick while TIC long-term purchases and capacity utilization data printed weaker than expected results. Building permits, housing starts, and preliminary UoM consumer sentiment data are due today.

EUR

The euro dealt with mostly weaker than expected GDP figures but gained a bit of ground when CPI data came in line with expectations. The core figure printed a 1.0% increase while the headline figure showed a 0.7% rise in price levels. Euro zone flash GDP was weaker than expected at 0.2% versus the estimated 0.4% growth figure while the previous quarter’s reading was revised lower. France reported a flat growth figure while Italy noted a 0.1% decline in GDP. Germany’s GDP was the only stronger than expected reading at 0.8%. French non-farm payrolls and euro zone trade balance are due today.

GBP

Data from the UK was light yesterday, as the CB leading index was the only report released. It showed a 0.3% increase, slower compared to the previous 0.4% rise. There are no reports due from the UK today, as the pound could continue to weaken on the change in BOE rhetoric recently.

CHF

The franc managed to hold steady to the dollar despite weaker than expected Swiss  PPI. After staying flat in the previous month, producer prices declined in April instead of printing the estimated 0.3% uptick, reviving deflation concerns in the country. There are no reports due from Switzerland today.

JPY

The yen took advantage of the downturn in risk appetite recently, although consumer confidence in Japan weakened. The report showed that the figure dipped from 37.5 to 37.0 as expected. Japanese revised industrial production data is the only report on tap for today and this might not have such a huge impact on yen movement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls showed signs of weakness in recent trading as risk sentiment took a turn for the worse. Canadian manufacturing sales was better than expected at 0.4% though and foreign securities purchases are up for release today. There are no other reports due from the comdoll economies so it might be all about risk sentiment and yields for the comdoll pairs.

By Kate Curtis from Trader's Way