Forex Major Currencies Outlook (Nov 4, 2014)

EURUSD tested new lows while USDJPY went on to rally to levels not seen since 2007. Data from the US was stronger than expected, as the ISM manufacturing PMI improved from 56.6 to 59.0, reflecting stronger industry expansion. There are no major reports up for release from the US economy today, with only the medium-tier factory orders data lined up, paving the way for potential short-term corrections among dollar pairs.

EUR

The euro continued to fall against the dollar but managed to edge higher against the yen, as data from the euro region came in mostly weaker than expected. The Spanish manufacturing PMI held steady at 52.6 while the Italian manufacturing PMI fell from 50.7 to indicate industry contraction at 49.0. Spanish unemployment change data is due today, along with EU economic forecasts. Joblessness in Spain could increase by 23.4K while more downgrades are expected from the EU, which might drive the euro much lower against its counterparts.

GBP

The pound managed to consolidate to the dollar yesterday, as data from the UK was stronger than expected. The manufacturing PMI improved from 51.5 to 53.2 to indicate a stronger pace of expansion in the industry. Construction PMI is up for release today and a decline from 64.2 to 63.5 is eyed, although this report doesn’t have a very strong impact on pound pairs. Do watch out for potential misses though, as it could lead to a GBPUSD breakdown. 

CHF

The franc made a bit of progress in filling its weekend gap to the dollar, thanks to stronger than expected SVME PMI. The index jumped from 50.4 to 55.3, indicating a strong pickup in the manufacturing industry. There are no reports due from Switzerland today, leaving the currency following in the euro’s footsteps or sensitive to market sentiment.

JPY

The yen was still in a weak spot yesterday, as the Japanese currency opened lower to most of its counterparts and yen pairs haven’t been able to fill in the gaps. Japanese banks were on holiday yesterday so there were no reports released while today had the manufacturing PMI, which declined from 52.8 to 52.4, reflecting weaker expansion in the industry. No other reports are due from Japan today.

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up ground to the dollar, after Australia’s building approvals showed a massive 11.0% decline and the ANZ job advertisements showed a weak gain. Earlier today, Australia reported a stronger than expected 1.2% increase in retail sales but its trade balance was weaker than expected. To top it off, the previous figure was downgraded to show a wider deficit. The RBA didn’t make any rate changes in their policy statement though, still emphasizing that the Aussie is high by historical standards. The New Zealand dairy auction is scheduled today while Canada has its trade balance due later, along with a speech from BOC Governor Poloz.

By Kate Curtis from Trader's Way