USD

The US dollar was off to a good start but failed to hold on to most of its gains as risk appetite returned to the markets when equities recovered.

Data was mixed, with the trade balance showing a wider deficit and  the IBD/TIPP economic optimism index beating expectations. Today has speeches by FOMC members Dudley and Williams.

EUR

The euro was able to stay mostly resilient despite the volatility in the financial markets for the most part of the day. German factory orders beat expectations with a 3.8% gain while the retail PMI dipped. German industrial production, French trade balance, and Italian retail sales are all lined up today.

GBP

The pound was still in a weak spot despite the pickup in risk-taking during the latter sessions. There were no major reports out of the UK but sterling still seems to be reeling from the set of bleak PMI readings across all sectors for January. Traders could start pricing in expectations for Super Thursday as early as today.

CHF

The franc gave back some of its recent winnings when risk appetite improved in the markets. There were no reports out of the Swiss economy then while today has the SNB foreign currency reserves data. A large increase from their earlier 744 billion CHF holdings could be indicative of central bank intervention, but SNB head Jordan doesn’t seem to be too bothered by the latest franc gains.

JPY

The yen also gave up some ground as risk appetite peeked back in the financial markets. Data from Japan has been stronger than expected today with the average earnings up 0.7% versus the 0.6% consensus and the leading indicators coming up next.

Commodity Currencies (AUD, NZD, CAD)

The Kiwi emerged on top thanks to risk-taking and stronger than expected data. The GDT auction yielded a 5.9% gain in dairy prices, its third consecutive gain this year, and the employment change figure was also better than expected at 0.5% versus 0.4%. The jobless rate improved from 4.6% to 4.5% instead of rising to 4.7% but this was partly due to a drop in labor force participation. Canada’s trade balance and Ivey PMI missed. The RBNZ decision is coming up and a slight shift to a hawkish tone could be Kiwi bullish.

By Kate Curtis from Trader’s Way