Forex Major Currencies Outlook (Dec 12, 2014)

Headline retail sales came in stronger than expected with a 0.7% gain versus the projected 0.4% increase while core retail sales marked a 0.5% gain instead of the estimated 0.1% uptick. To top it off, the previous month’s readings were revised higher. Initial jobless claims were also better than expected at 294K versus the estimated 299K.

EUR

The euro resumed its weak trend against most forex counterparts as the next round of targeted LTRO from the ECB churned out weak demand. This sparked talks of actual quantitative easing from the central bank in order to shore up lending and economic growth. French CPI was weaker than expected at a 0.2% decline in prices instead of the projected 0.2% uptick. For today, euro zone quarterly employment change and industrial production data is due and weak figures could lead to more euro selling.

GBP

The pound managed to hold on to its recent wins to the dollar despite the run in risk aversion recently. There were no major reports released from the UK economy then while today only has the CB leading index. This might show another decline following the previous 0.4% dip, which might force the pound to lose ground.

CHF

 The franc had a relief rally yesterday when the SNB refrained from implementing negative deposit rates or intervening in the forex market. EURCHF moved close to the 1.2000 floor despite SNB head Thomas Jordan’s insistence that they are ready to act to defend the franc peg if necessary. The franc also drew support from upgraded growth forecasts. No other reports are due from the Swiss economy today.

JPY

The yen returned some of its recent wins to the dollar and the rest of its FX trading counterparts, as data from Japan continued to disappoint. Core machinery orders saw a 6.4% drop versus the projected 2.1% dip while the tertiary activity index showed a 0.2% decline, worse than the estimated 0.1% dip. Revised industrial production data is due today and downgrades might spark more yen weakness.

Commodity Currencies (AUD, NZD, CAD)

 The comdolls resumed their slide to the dollar when risk aversion popped back in the financial markets. Headline jobs data from Australia was stronger than expected with a 42.7K increase in employment for November. However, the previous figure suffered a huge downgrade, enough to bring the jobless rate up from 6.2% to 6.3%. In New Zealand, a less dovish RBNZ statement led to gains for the Kiwi, although the rally wasn’t sustained. Chinese industrial production data and retail sales figures are up for release today.

By Kate Curtis from Trader's Way