USD

The Greenback weakened against most of its major currency counterparts in yesterday’s trading as risk appetite generally improved. 

There have been no major reports released from the U.S. lately, which explains why dollar pairs’ moves have been limited in the past few days. The only report due from the U.S. today is the initial jobless claims report, which could show a slight increase from the other week’s 324K to 333K for last week. A significantly higher than expected reading could undermine the recent recovery in the U.S. labor market, but a figure close to the consensus isn’t likely to result in huge dollar moves.

EUR

The euro got a boost from improved economic data from Germany as the country’s industrial production figure beat expectations. The report printed a 1.2% increase for March, much better than the estimated 0.1% decline, while the previous month’s figure was revised up to 0.6%. Only the ECB monthly bulletin is set for release from the euro zone today as French and German banks are on a holiday. With that, expect lower liquidity in the London session and possibly higher volatility.

GBP

It’s a big day for the pound pairs today as the BOE will be making its interest rate decision. No changes to its 0.50% interest rate and 375 billion GBP asset purchases are expected, so traders will be all eyes and ears on the accompanying speech by BOE Governor Mervyn King. If the central bank head decides to emphasize the recent improvements in the British economy, such as the strong PMI figures and the fact that the U.K. dodged a triple-dip recession, the pound could be in for some gains. Be wary though that the BOE might also join the currency intervention camp in order to retain its competitiveness in the global economy.

JPY

Only the leading indicators report will be printed by Japan today. A slight improvement from 97.6% to 97.7% is expected as the BOJ’s recent stimulus efforts might have already kicked in. Other than that, the yen’s price action could be mostly dictated by risk sentiment for the rest of the trading day.

CHF

The Swiss CPI missed expectations and fell flat in April, chalking up a 0.6% decline on an annual basis. Despite that, the Swiss franc managed to outpace the U.S. dollar in yesterday’s trading. There are no major reports due from Switzerland today so expect quiet trading among franc pairs or that USD/CHF will be swayed by dollar reports.

Commodity Currencies (AUD, CAD, NZD)

Both Australia and New Zealand enjoyed stronger than expected jobs data recently, with Australia printing a 50.1K increase in monthly hiring while New Zealand showed 1.7% employment growth for Q1 2013. What’s currently weighing on the Kiwi though is RBNZ head Graeme Wheeler’s admission that the central bank intervened in the forex market recently to curb Kiwi strength. As for the Canadian dollar, only the NHPI report is on tap for today and this isn’t likely to spur a huge reaction from USD/CAD.

By Kate Curtis from Trader’s Way