Forex Major Currencies Outlook (June 4, 2014)

Data from the US economy was relatively better, as factory orders showed a 0.7% increase and saw an upward revision in the previous month’s reading. Total vehicle sales came in at 16.8 million versus the estimated 16.0 million reading. For today, US trade balance and ISM non-manufacturing PMI are up for release. The trade deficit could widen from 40.4 billion USD to 40.8 billion USD while the PMI is slated to climb from 55.2 to 55.6.

EUR

Despite the downgrade in inflation forecasts, the euro managed to put up a good fight to the dollar and score wins to the yen as the employment reading came in better than expected. CPI forecasts were dropped from 0.7% to 0.5% while the unemployment rate improved from 11.8% to 11.7%. Spanish and Italian services PMI are up for release today and these might not have such a huge impact on euro movement as traders are awaiting the ECB rate statement tomorrow.

GBP

The pound showed weakness when the construction PMI fell short of expectations and dropped from 60.8 to 60.0 instead of improving to 61.2. For today, the services PMI is up for release and this would have a bigger impact on pound movement since the sector comprises a huge chunk of overall economic activity. A dip from 58.7 to 58.3 is expected and this might lead to pound weakness all over again.

CHF

The franc was a little more steady in recent trading, despite the lack of top-tier data from Switzerland yesterday. There are still no reports due from the country today so it might be more sideways movement from franc pairs, unless there are any major changes in risk sentiment.

JPY

The yen fell victim to the strong improvement in market sentiment recently as it lost ground to its major counterparts. The Nikkei managed to chalk up a pretty decent gain for the day, along with other Asian equities. There have been no reports released from Japan then and none are due today, which suggests that yen pairs might keep moving to the tune of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls had a mixed performance in recent trading as the Kiwi continued its descent while the Aussie had a chance to bounce on a relatively upbeat RBA rate statement. The central bank made no changes to monetary policy but gave a more positive outlook for Australia, even though the latest retail sales release came in weak. The Loonie should take center stage today with the BOC interest rate decision, although no actual changes are expected again.

By Kate Curtis from Trader's Way