Forex Major Currencies Outlook (Sep 18, 2017)

Headline retail sales slipped 0.2% instead of posting the estimated 0.1% uptick while the core version of the report indicated a smaller than expected 0.2% gain versus the 0.5% consensus. Industrial production and capacity utilization also disappointed while the preliminary UoM consumer sentiment index dipped to 95.3. Only a couple of medium-tier reports are lined up today, keeping traders' attention on the North Korea situation and more updates on tax reform. 

EUR 

The euro had a mixed run as it reacted mostly to currency-specific events. The region's trade surplus was below consensus at 18.6 billion EUR versus 20.1 billion EUR while the previous reading was downgraded to 21.7 billion EUR. Final CPI readings and the Italian trade balance are up for release today. 

GBP 

The pound got another boost on Friday and carried on with its post-BOE rally when MPC member Vlieghe refrained from jawboning the currency. He signaled a shift from his usual dovish tone to a more hawkish bias, leading many to speculate that it's only a matter of time before the central bank hikes rates. Earlier today, the Rightmove HPI showed a 1.2% drop in house prices. 

CHF 

The Swiss franc also had a mixed performance as the lower-yielding currency mostly reacted to its counterparts and was also hit by some profit-taking at the end of the week. There were no major reports out of the Swiss economy on Friday and none are due today so the week could be off to a slow start for franc pairs. 

JPY 

The yen lost ground to most of its peers as bulls now seem to be worried about the potential repercussions of a North Korean missile strike on the Japanese economy. Traders also lightened up on their holdings ahead of the BOJ statement this week. Japanese banks are closed for the holiday today, though 

Commodity Currencies (AUD, NZD, CAD) 

The comdolls gave up a bit of ground on Friday as risk aversion peeped back in the financial markets on renewed threats from North Korea. There were no major reports out of Australia, New Zealand and Canada today so comdolls could be off to a slow start or sensitive to market sentiment ahead of top-tier events later on. 

By Kate Curtis from Trader's Way