USD

The US dollar weakened against most of its counterparts on Friday, as data from the US turned out below expectations. 

The Empire State manufacturing index printed a surprise negative figure, as it slipped to -2.2 instead of rising to the estimate at 5.2. Industrial production, capacity utilization, and import prices also came in the red. For today, only medium-tier data such as foreign securities purchases and a couple of speeches from FOMC officials are lined up. Expect quiet trading for most dollar pairs unless we hear of surprising comments from Dudley and Rosengren. 

EUR

The euro was able to advance against the Greenback and the yen on Friday, thanks to an improvement in market sentiment and overall lack in demand for the dollar and the yen. Data from the euro zone came in line with consensus, as the CPI figure showed a 0.7% increase while the core version of the report printed a 0.8% uptick. For today, there are no major reports from the euro zone so EUR/USD and EUR/JPY might see quiet trading ahead. 

GBP

The pound gapped up over the weekend, following Friday’s strong rally against the dollar and the yen. There were no reports released from the UK economy then but the previous days’ worth of data was enough to keep the pound supported against most of its counterparts. For today, the UK just reported a 2.4% decline in house prices for November, enough to remove most of the 2.6% gains seen last October. However, the pound just made a brief dip after the release and might still be on its way up north should sentiment for the UK remain positive. 

CHF

There were no reports released from Switzerland last Friday, yet the franc still managed to hold its ground against the US dollar. There are still no reports lined up from Switzerland today though so USD/CHF might be in for more sideways movement below the .9200 major psychological level unless there are economic surprises from the US economy. 

JPY

The yen gave up more ground to most of its counterparts on Friday, as the Nikkei climbed to record highs and dwindled demand for the lower-yielding yen. The Japanese equity market continued to take advantage of the improvement in risk sentiment and anticipation of further stimulus from the BOJ. There are no reports due from Japan today so the yen pairs might keep reacting to Nikkei price behavior. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls were finally able to recover against the US dollar on Friday, thanks to the weak data from the US economy. Canadian manufacturing sales came in line with consensus at 0.6%, allowing the Loonie to hold its ground. Only the Canadian foreign securities purchases is due from these economies today and this isn’t likely to have a material impact on price action. Risk sentiment could play a bigger role for the next few trading hours. 

By Kate Curtis from Trader’s Way