Forex Major Currencies Outlook (May 14, 2015)

Headline retail sales showed a flat reading for April instead of posting the projected 0.3% gain while core retail sales indicated a mere 0.1% uptick versus the estimated 0.4% increase. Apart from that, US import prices marked a 0.3% decline instead of showing the estimated 0.3% uptick, suggesting weaker price pressures down the line. For today, US PPI readings and initial jobless claims data are due.

EUR

The euro popped higher against its forex counterparts, thanks to mostly stronger than expected data from the euro zone’s top economies. France posted a higher than expected GDP growth of 0.6% versus the projected 0.4% figure while Italy showed a stronger than expected 0.3% expansion, higher than the projected 0.2% growth figure. Meanwhile, Germany’s GDP reading came in as a disappointment at 0.3% instead of the estimated 0.5% expansion. The region’s flash GDP reading landed at 0.4%, a notch lower than the projected 0.5% GDP figure. French and German banks are on holiday today so there are no reports due from the region.

GBP

The pound experienced additional volatility during the release of the BOE Inflation Report, which revealed that the central bank isn’t likely to hike interest rates anytime this year. It also showed that policymakers downgraded growth forecasts for this year and the next couple of years while citing that inflation could fall into the negative territory before eventually recovering back to their 2% target. Jobs data came in weaker than expected, with the claimant count change showing a mere 12.6K drop in hiring versus the estimated 20.5K decline while the previous reading suffered a downgrade. There are no reports lined up from the UK today.

CHF

The franc recovered to the dollar even though there were no reports out of Switzerland. The Swiss currency drew support from positive developments in the euro zone, as these lowered the odds of further ECB easing and lessened the need for the SNB to intervene and keep the franc weak. There are still no reports due from Switzerland today since Swiss banks are closed for the holiday.

JPY

The yen gave up ground to most of its forex rivals when risk appetite improved in the forex market. There have been no major reports released from Japan, leaving the yen to act as a counter currency. For today, there are still no top-tier reports lined up, although medium-tier data such as the preliminary machine tool orders report could provide clues for the next batch of major reports.

Commodity Currencies (AUD, NZD, CAD)

The comdolls enjoyed a strong recovery in recent trading, particularly for the Kiwi which saw stronger than expected retail sales readings from New Zealand. The country showed a 2.7% jump in headline retail sales for the first quarter and a 2.9% surge in core retail sales. The RBNZ indicated their plans to implement measures to curb housing inflation, which suggests that they could be preparing to lower borrowing costs soon. There are no major reports lined up from Australia and Canada.

By Kate Curtis from Trader's Way