Forex Major Currencies Outlook (March 26, 2014)

The CB consumer confidence report churned out stronger than expected results, with the index climbing from 78.3 to 82.3 and surpassing the consensus at 78.7. However, new home sales turned out to be a disappointment at 440K while the previous figure was revised lower. The Richmond manufacturing index also showed a weak reading of -7 instead of the projected -1 figure. Durable goods orders data is up for release today, with the headline figure expected to print a 1.1% increase and the core report to show a 0.3% uptick.

EUR

The euro had a volatile day as it was tossed around by comments on negative deposit rates. Germany’s Bundesbank head Weidmann, who is also an ECB member, hinted that this policy option could be implemented since the ECB is running out of tools to combat the euro’s appreciation. Apparently, gains in the shared currency are starting to hurt Germany’s economic performance. Other ECB officials suggested that further QE could be implemented to boost inflation. Germany’s Ifo business climate figure came in line with expectations and today it will be the turn of the GfK consumer climate figure to show how the consumer sector is faring.

GBP

The pound found a bit of support as the UK CPI came in line with expectations at 1.7% while other inflation indicators showed stronger than expected results. BBA mortgage approvals came in weaker than expected though at 47.6K while the previous month’s reading was downgraded. No reports are due from the UK today so the pound’s rallies could carry on if risk appetite stays strong.

CHF
The franc had a choppy trading day despite the lack of major reports from Switzerland. The SNB quarterly bulletin and UBS consumption indicator are up for release today and this might push franc pairs in a clearer direction.

JPY

The yen lost ground to the pound, Aussie, and Loonie but managed to consolidate against the euro in yesterday’s trading. There were no reports released from Japan, as the yen’s movement hinged on currency-specific events. There are still no reports lined up from Japan today so the lower-yielding currency’s action could be sensitive to risk once more.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to edge higher against the dollar in recent trading, although their rallies were slower this time around. AUD/USD climbed safely above the .9150 handle while USD/CAD retreated to 1.1150. New Zealand is set to print its trade balance later on and possibly show a larger surplus of 595 million NZD compared to the previous 306 million NZD, which might give the Kiwi a boost. No reports are due from Australia and Canada today.

By Kate Curtis from Trader's Way