USD

The US dollar continued to advance against the European currencies while showing more weakness to the commodity currencies as traders position themselves ahead of today’s NFP release. 

The initial jobless claims report came in line with expectations of a 294K figure, setting the tone for a potential upside surprise for the NFP. Analysts expect to see 241K in hiring gains, slower compared to the previous 321K figure. However, revisions to previous readings are expected and might be enough to keep the dollar supported.

EUR

The euro slid lower to the dollar and consolidated to the yen, thanks to the lack of major reports in recent trading. Euro zone retail sales was stronger than expected at 0.6% while the producer price index showed a worse than expected 0.3% drop. Later today, German and French industrial production and trade balance figures are due, all of which are unlikely to cause huge euro price swings. 

GBP

The pound failed to draw any support from the BOE interest rate statement, as Carney clarified that they are unlikely to hike rates before the general election this May. In fact, many believe that the central bank isn’t looking to hike rates at all this year, as inflation is projected to weaken further. External growth risks from the slowdown in the euro zone is also concerning for the BOE. UK manufacturing production, trade balance, and construction output numbers are due today.

CHF

The franc struggled to hold steady against the dollar yesterday since there were no top-tier data releases from Switzerland. The unemployment rate is up for release today and it might hold steady at 3.1%. Other than that, risk sentiment might also be responsible for franc price action for today.

JPY

The yen paused from its recent rallies when risk appetite appeared to improve in recent trading sessions. The Nikkei ended on a positive note, as Asian equities recovered off their lows. There are no major reports lined up from Japan today, suggesting that market sentiment could continue to dictate price trends.

Commodity Currencies (AUD, NZD, CAD)

The comdolls managed to take advantage of the pickup in risk appetite, despite weaker than expected economic data. In Australia, retail sales marked a bleak 0.1% uptick versus the estimated 0.3% increase. China’s CPI came in line with expectations at 1.5% but the worse than expected 3.3% fall in PPI hints of weaker inflationary pressures in the coming months. Canada is expected to show a 10.3K pickup in hiring for December and report a 0.8% uptick in building permits.

By Kate Curtis from Trader’s Way