USD

The US dollar gave up a lot of ground in yesterday’s trading sessions when risk appetite picked up on news that the EU and IMF have come up with a debt deal for Greece. 

Data from the US also came in mostly weaker than expected, as factory orders and the IBD/TIPP economic optimism index fell short of forecasts. The US ADP non-farm employment change report is due today and analysts are expecting to see a 198K increase, higher compared to the previous 169K gain. Also lined up is the US ISM non-manufacturing PMI which could dip from 57.8 to 57.1 and the Fed Beige Book.

EUR

The euro advanced against its forex rivals when news reports indicated that EU and IMF leaders are ready to present a set of economic reforms that Greece can implement to secure its next set of aid. These proposals are still up for approval from the Greek government though and another standstill might force the shared currency to return its recent wins. Another factor that boosted the euro yesterday was the stronger than expected inflation report, which showed a 0.3% increase in headline CPI estimates and a 0.9% figure for the core CPI. Later today, the ECB is set to make its monetary policy statement and possibly keep rates and bond purchases unchanged.

GBP

The pound followed in the euro’s footsteps and made a quick recover in yesterday’s sessions, also thanks to the stronger than expected UK construction PMI. The reading jumped from 54.2 to 55.9, outpacing the forecast at 55.1. For today, the UK services PMI is due and this might have a stronger impact on the pound since this sector comprises a bulk of overall growth. The reading is slated to dip from 59.5 to 59.2 but a higher than expected result could allow the pound to extend its gains.

CHF

The franc was able to add to its recent wins, thanks to the improved sentiment in the euro zone. There were no reports released from Switzerland then and none are due today, which suggests that the Swiss currency could keep taking its cue from the euro.

JPY

The yen managed to recover some of its losses to the dollar but wound up lower against its higher-yielding counterparts. Data from Japan was mostly stronger than expected, as the average cash earnings report showed a 0.9% gain versus the projected 0.7% increase. There are no reports lined up from Japan today, leaving the yen sensitive to risk flows.

Commodity Currencies (AUD, NZD, CAD)

The comdolls shrugged off weaker than expected reports and took part in the risk rallies in recent trading. The RBA kept rates unchanged, allowing the Aussie to rally upon finding out that the outlook was not as grim as expected. The currency also got a boost from a stronger than expected Q1 GDP figure of 0.9% for Australia. In New Zealand, the dairy auction revealed another slide in prices, limiting the Kiwi’s gains. There are no other reports due from these economies today.

By Kate Curtis from Trader’s Way