Forex Major Currencies Outlook (Dec 19, 2014)

Initial jobless claims was better than expected at 289K versus the projected 297K reading, but the Philly Fed index missed the mark and showed a drop from 40.8 to 24.5, worse than the projected decline to 26.3. There are no reports due from the US economy today, which suggests that the dollar could react to risk sentiment or could be sensitive to profit-taking.

EUR

The euro was able to bounce back to the dollar in yesterday’s sessions, as the German Ifo business climate index came in line with expectations. The reading improved from 104.7 to 105.5, reflecting a pickup in optimism. The GfK German consumer climate report is due today and it might show a climb from 8.7 to 8.9, which would also reflect an improvement in sentiment.

GBP

The pound had a strong recovery in yesterday’s London trading session, thanks to upbeat retail sales figures from the UK. Consumer spending jumped by 1.6% in November while the previous month’s reading was upgraded to show a 1.0% gain. Much of the pickup was spurred by lower gas prices, which allowed consumers to spend more of their disposable income on other items. Only medium-tier data namely CBI realized sales and public sector net borrowing figures are up for release from the UK today.

CHF

The franc suffered a sudden selloff in recent trading as the SNB announced negative deposit rates. EURCHF edged farther away from its 1.2000 floor after the announcement, as the central bank sought to ward off deflationary pressures and keep their local currency weak. There are no reports due from Switzerland today.

JPY

The yen continued to return some of its recent wins to the dollar, with traders bracing themselves for today’s BOJ monetary policy statement. No actual easing measures are expected, although dovish remarks could be heard as the central bank discusses future policy plans.

Commodity Currencies (AUD, NZD, CAD)

Thecomdolls managed to bounce off their recent lows as risk appetite improved in the markets. New Zealand visitor arrivals declined from 3.5% to 3.1% in November while the ANZ business confidence figure marked a drop from 31.5 to 30.4, reflecting weaker optimism. For today, the Loonie could take center stage with the CPI and retail sales figures due from Canada. Headline CPI could show a 0.2% drop while core CPI could see a 0.1% uptick. Headline retail sales might indicate a 0.4% drop while core retail sales could show a 0.2% gain.

By Kate Curtis from Trader's Way