USD

The US dollar returned some of its recent gains last Friday when the US advanced GDP reading came in below expectations. 

The economy showed a 2.6% growth figure for Q4 2014, lower than the projected 3.0% expansion and the previous 5.0% GDP. Chicago PMI, however, surprised to the upside with a gain to 59.4 and allowed the dollar to regain ground. For today, the Fed’s preferred measure of inflation or the core PCE price index is up for release, along with the ISM manufacturing PMI. Personal spending and income reports are also due, with strong figures likely to renew support for the Greenback.

EUR

The euro managed a quick recovery on Friday, as data from the euro zone came in mixed. The headline CPI flash estimate came in at -0.6%, lower than the projected -0.5% figure and the previous -0.2% reading, while the unemployment rate improved from 11.5% to 11.4%. Spanish flash CPI and GDP also came in stronger than expected yet German retail sales fell short with a bleak 0.2% gain. Spanish unemployment change and manufacturing PMI could move euro pairs around today, along with the region’s final PMI reading. 

GBP

The pound moved sideways on Friday, as the lack of top-tier data from the UK kept the currency’s gains in check. Net lending to individuals was weaker than expected at 2.2 billion GBP versus the projected 3.1 billion GBP figure. UK manufacturing PMI is up for release today and an improvement from 52.5 to 52.9 is eyed. Strong data could allow the pound to extend its gains while weak figures could lead to more losses.

CHF

The franc continued to edge lower to the dollar and the euro on Friday, as traders priced in the possibility of seeing more currency intervention from the SNB. Data from Switzerland was better than expected though, as the KOF economic barometer printed a 97.0 reading versus the projected 94.8 figure. However, this was lower compared to the previous 98.8 reading. The Swiss manufacturing PMI is up for release today and a climb from 54.0 to 54.5 is expected. 

JPY

The yen continued to advance against most of its currency counterparts last week as risk aversion stayed in the financial markets. Data from Japan was weaker than expected, with household spending marking a large 3.4% decline and the national core CPI falling from 2.7% to 2.5%. There are no major reports due from Japan today, indicating that risk sentiment could continue to direct yen price action. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls were still weakening on Friday, after Canada posted a 0.2% economic contraction for December. Over the weekend, China’s official manufacturing PMI indicated a drop from 50.1 to 49.8, reflecting industry contraction and weaker demand for Australia’s raw material exports. The HSBC version of the report indicated a drop from 49.8 to 49.7. No other reports are lined up from the comdoll economies today. 

By Kate Curtis from Trader’s Way