USD

The US dollar advanced against most of its peers as risk aversion seemed to return to the financial markets. 

There have been no major reports out of the US economy yesterday while today has the initial jobless claims and existing home sales data on tap. The lack of any clear direction among dollar traders could leave the currency moving to the tune of risk sentiment for the rest of the day.

EUR

The euro could be in for a volatile day since the ECB is gearing up to make its policy statement. The central bank admitted that it is open to further easing in their previous statement, and data has fared much worse since. In particular, the headline CPI printed a 0.1% decline in price levels while figures from Germany were mostly disappointing. A dovish bias could send the euro selling off across the board while reassuring remarks could spur a relief rally.

GBP

The pound continued to consolidate against most of its peers, as traders are still waiting for the UK retail sales release. Data from the UK came in better than expected yesterday, as the public sector deficit was smaller than expected. The retail sales report is expected to show a 0.3% gain in spending versus the previous 0.2% uptick. 

CHF

The franc took a pause from its recent selloff, as traders are awaiting the ECB rate statement. Even though no actual changes are expected for now, any hints of easing could prompt the SNB to intervene in the forex market to keep the franc weak. 

JPY

The yen continued to give up ground against most of its peers when the Japanese all industries activity index showed a 0.2% drop as expected. Data from Japan has been reflecting a slowdown recently, increasing speculations of further easing from the BOJ. No other reports are due from Japan today, keeping risk sentiment in play.

Commodity Currencies (AUD, NZD, CAD)

The comdolls returned some of their recent wins after the downbeat NZ dairy trade auction and the BOC statement. Even though the Canadian central bank decided to keep monetary policy unchanged, they downgraded their growth forecasts for the next two years and reiterated that the oil slump could continue to weigh on investment and export activity. Canadian retail sales data is due today and a 0.2% increase in the core figure and a 0.1% uptick in the headline figure is eyed. 

By Kate Curtis from Trader’s Way