USD

The US dollar packed in the gains against the British pound and Australian dollar on Friday, as these currencies were hit hardest after the Davos World Economic Forum.

The economic leaders affirmed the strength in the US economy, also adding to support for the US dollar. US new home sales data is up for release today and the report could show a dip from 464K to 457K.

EUR

The euro consolidated against most of its major counterparts in recent trading, as economic leaders discussed the possibility of deflation in the euro zone region. Draghi mentioned that the ECB will keep interest rates low for an extended period but haven’t discussed the possibility of aggressive asset purchases just yet. Eurogroup meetings are going on today and there are no major reports lined up from the euro zone, except for the German Ifo business climate figure.

GBP

The pound lost a lot of ground to its counterparts on Friday when BOE Governor Carney said that they will have to revise their forward guidance strategy. Previously the BOE said that it would consider hiking rates once the jobless rate falls below 7.0% but Carney reiterated that reaching the threshold doesn’t guarantee an immediate rate hike. There are no reports due from the UK today.

CHF The franc gained ground against the dollar on Friday, despite the lack of data from Switzerland. There are still no reports due from Switzerland today so it could be all about risk sentiment driving franc price action for the upcoming trading sessions.

JPY

The yen continued its winning ways against the other major currencies on Friday as risk aversion took control of the markets. In addition, economic leaders in Davos confirmed that Japan is starting to recover and that inflation is picking up. There are no reports lined up from Japan today, as the yen might keep taking advantage of the risk-off market environment.

Commodity Currencies (AUD, NZD, CAD)

The Australian dollar continued to lose ground on Friday as risk aversion set in. There have been no major reports released from Australia then and none are due today. There are also no reports due from Canada and New Zealand, which suggests that risk sentiment might keep driving their currencies for now.

By Kate Curtis from Trader’s Way