Forex Major Currencies Outlook (Nov 18, 2014)

Capacity utilization and industrial production missed the marks while the Empire State manufacturing index improved from 6.2 to 10.2, short of the estimated climb to 12.1. Data on producer price inflation is due today, with the headline figure likely to post a 0.1% dip and the core figure expected to show a 0.2% gain. Stronger than expected data could boost the U.S. currency while weak figures might lead to another short-term selloff.

EUR

The euro resumed its selloff to the dollar in yesterday’s sessions, as mixed reports came out of the region. Italy’s trade balance was slightly weaker than expected but the euro zone trade balance came in strong. Euro pairs might see more volatility today with the German and euro zone ZEW economic sentiment figures due. The German ZEW is slated to improve from -3.6 to 0.9 while the euro zone ZEW could climb from 4.1 to 4.3, reflecting small improvements in optimism. Stronger than expected figures could allow the euro to recover against its counterparts.

GBP

The pound carried on with its descent to most of its forex counterparts, as the sentiment from the latest BOE inflation report still weighed on the currency. The inflation figures are due today and might add support to the central bank’s dovish bias, as the annual CPI is slated to stay at 1.2% while producer prices are expected to show a sharper decline of 1.4%. Weaker than expected readings might worsen the pound’s slide.

CHF

The franc gave back some of its recent wins to the dollar but continued to edge higher against the euro, as there were no reports released from Switzerland yesterday. There are still no reports due from the country today, as the franc might take its cue from euro zone data.

JPY

The yen was back in selloff mode even after the recent GDP readings lowered the odds of seeing another sales tax hike next year. The economy contracted 0.4% in Q3, putting Japan back in recession. Prime Minister Abe is set to announce his plans for a snap election and the time frame for a sales tax hike and his remarks might have a strong impact on yen movement.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent wins, as traders booked profits off key levels. Foreign direct investment slumped 1.2% in China, weighing slightly on the Australian dollar in today’s Asian session. The New Zealand dairy auction is scheduled today and another decline in the dairy index could lead to more losses for the Kiwi.

By Kate Curtis from Trader's Way