Forex Major Currencies Outlook (February 17, 2014)

The preliminary UoM consumer sentiment index for February held steady at 81.2. There are no reports lined up from the US today since banks are closed for President’s Day. With that, stay on your toes for potentially higher volatility in today’s New York session.

EUR

The euro took full advantage of dollar weakness on Friday but was unable to keep up its rally against the Japanese yen. GDP reports from the euro zone came in strong, with the French economy showing 0.3% growth and the German economy printing a 0.4% GDP figure. This was enough to propel the euro zone economy into 0.3% growth for the quarter and provide a bit of support to the euro against most of its counterparts. There are no reports due from the euro zone today with only the Eurogroup meetings scheduled.

GBP

The pound kept up with its strong rally against the dollar and the yen on Friday, despite the lack of top-tier UK data on that day. Over the weekend, BOE Governor Carney had a testimony in which he commended the recovery in the UK housing market. There are no reports lined up from the UK today so the pound might be able to extend its rally if risk appetite stays in the markets.

CHF

The franc was able to pocket more gains last Friday, thanks to broad dollar weakness and the improvements in the euro zone economies. There were no reports released from Switzerland then and none are due today, which suggests that the franc might keep moving to the tune of risk sentiment.

JPY

The yen gained ground on the heels of weaker than expected Japanese GDP, as the economy posted 0.3% growth instead of the estimated 0.7% GDP figure. The revised industrial production report is up for release today but this might not be enough to keep the Nikkei and the yen pairs from sliding.

Commodity Currencies (AUD, NZD, CAD)

The comdolls also gained ground on dollar weakness last week, despite the weaker than expected manufacturing sales report from Canada. China had a better than expected CPI, which was enough to keep the Australian dollar supported, but New Zealand printed a weak quarterly retail sales report. However, the Kiwi still managed to start this week on a strong note, as NZD/USD stayed on track towards the .8400 handle. There are no other major reports lined up from the comdoll economies for the rest of the day.

By Kate Curtis from Trader's Way