Forex Major Currencies Outlook (Jan 16, 2018)

Only the Empire State manufacturing index is due today and a gain from 18.0 to 18.5 is expected. Stronger than expected results, combined with positive earnings data, could lead to a pickup for the dollar.

EUR

The euro was one of the top performers in recent sessions thanks to hawkish commentary from ECB official Hansson. He hinted that the central bank could end bond purchases in September and that currency appreciation won't hurt their inflation outlook. The region's trade balance also came in better than expected while medium-tier reports like German final CPI and Italian trade balance are lined up today.

GBP

The pound also scored decent gains and shrugged off dovish remarks from a BOE official, as well as the collapse of Carillion. There were no major reports out of the UK then while today has inflation numbers due. Headline CPI could dip from 3.1% to 3.0% while the core reading could fall from 2.6% to 2.7%, probably weighing on tightening hopes.

CHF

The franc was also one of the stronger currencies as it trailed the euro and took advantage of dollar weakness. There were no major reports out of Switzerland then while today has a speech by SNB head Jordan. Any hint of potential intervention could keep a lid on franc gains.

JPY

The yen was able to advance against the dollar but gave up ground to most of its peers. BOJ Governor Kuroda reiterated their pledge to conduct easing but bulls seem unconvinced since the central bank reduced its JGB purchases recently. Tertiary industry activity data is due next, then core machinery orders data is due tomorrow.

Commodity Currencies (AUD, NZD, CAD)

The Loonie also strengthened against most of its peers as some traders held out hopes for a BOC hike this week. Crude oil also kept advancing despite rising US output expectations. In Australia, new motor vehicle sales picked up by 4.5%. New Zealand has its GDT auction coming up.

By Kate Curtis from Trader's Way