Forex Major Currencies Outlook (August 28, 2013)

As it turns out, the ongoing turmoil in Syria is causing traders to worry about a full-out war in the Middle East, which in turn could limit oil supply and have negative repercussions for overall growth. This has led to a rally in gold and other safer assets, including the US dollar. For today, pending home sales are up for release and a 0.2% rebound is expected to follow the previous 0.4% decline. Crude oil inventories are also due and a large decline in stockpiles could fuel more risk-off trades. 

EUR

The euro managed to hold its ground against the dollar but was no match to yen strength. German Ifo business climate data came in better than expected, as the reading climbed from 106.2 to 107.5, higher than the estimate at 107.1. For today, German GfK consumer climate data is due along with Germany’s import prices. Strong data from the euro zone could allow the euro to stay resilient against its counterparts should risk aversion remain in the markets. 

GBP

The pound gave up more ground to the dollar and the yen, as a result of risk aversion. There were no reports released from the UK in yesterday’s trading, which was why the currency was unable to draw any support. For today, CBI realized sales are up for release and an improvement from 17 to 19 is eyed. Also today, BOE Governor Carney will be giving a speech and possibly highlight the recent improvements in the UK economy. 

CHF

The franc was beat up by the US dollar in yesterday’s trading when traders bought up lower-yielding currencies. Today’s release of the UBS consumption indicator could provide some support for the Swiss currency if the actual figure comes in higher than the previous 1.44 reading. Otherwise, the franc could continue to lose ground to the U.S. dollar if risk aversion stays. 

JPY

The yen emerged victorious in yesterday’s trading as risk off flows benefitted the Japanese currency. There were no releases from Japan yesterday and none are due today so the yen’s movement could continue to depend on market sentiment. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls were no match to dollar strength, although the Loonie managed to pare some of its losses. The reason is that the ongoing turmoil in Syria is causing a run to the safe-haven assets but is also lifting oil prices, which is good for the Canadian dollar. For today, there are no major reports due from any of the comdoll economies but the US crude oil inventories report might have an impact on the Canadian dollar. 

By Kate Curtis from Trader's Way