Forex Major Currencies Outlook (October 28, 2014)

Pending home sales was weaker than expected with a mere 0.3% uptick instead of the estimated 1.1% gain. US durable goods orders data is due today, with the headline figure expected to show a 0.4% gain following the previous 18.4% drop and the core figure likely to show a 0.5% uptick. Weaker than expected data could indicate that the US economy is starting to slow down and might lead to dollar selling.

EUR

The euro made a bit of recovery recently even as the German Ifo business climate report came in weaker than expected. The index slipped from 104.7 to 103.5, way below the estimated 104.6 reading. This indicates that business sentiment has weakened considerably in the euro zone’s largest economy. Data on German import prices is due today and might indicate if the region is in for more deflationary pressures, which might then cause euro weakness.

GBP

The pound continued its steady ascent in recent trading, as UK CBI realized sales showed an improvement. The reading held steady at 31 instead of dipping to the estimated 29 figure. There are no reports due from the UK today, which suggests that the pound might be in for a bit of consolidation.

CHF

The franc advanced to the dollar despite the lack of data from Switzerland yesterday, suggesting that the currency simply took its cue from the euro. There are still no major reports lined up from Switzerland today, which means that consolidation might be seen unless there’s a huge change in market sentiment.

JPY

The yen was still in for a bit of weakness at the start of the week, as traders priced in the odds of additional BOJ easing. Last week, BOJ Governor Kuroda said that the country might have trouble meeting its inflation target since commodity and energy prices keep falling. Earlier today, the retail sales report showed a stronger than expected 2.3% gain, enough to reassure some traders that more stimulus isn’t necessary.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued their struggle, as though awaiting more clues from market and risk sentiment. AUDUSD was still moving sideways while the Loonie gave up some of its gains to the yen and held steady to the dollar. There were no reports from the comdoll economies yesterday and none are lined up today, suggesting that market sentiment might be a major driver or that pairs could stay stuck in consolidation for the time being.

By Kate Curtis from Trader's Way