USD

The US dollar extended its losses to its major counterparts in yesterday’s trading, despite the lack of data from the US economy. 

Risk appetite was still strong, especially after China released the detailed set of economic and financial plans from its third plenum. For today, there are still no major reports lined up from the US but a few FOMC officials are set to testify. These officials have already stated their stances on the taper issue already so their remarks might not trigger such a huge reaction from dollar pairs. 

EUR

The euro continued to edge higher against the dollar and the yen, as traders seemed to brush aside the impact of the latest ECB interest rate cut. Data from the euro zone was mixed, with the current account balance coming in below consensus and the trade balance meeting expectations of a 14.3 billion EUR surplus. For today, the German ZEW report could have a stronger impact on the euro, as the actual figure is expected to climb from 52.8 to 54.6. 

GBP

The pound managed to stay afloat yesterday but not without a bit of selling pressure, as a BOE survey revealed that systemic risk was becoming a concern for banks and borrowers. Apparently, respondents to the survey believe that the low interest rate environment could soon result to uncontrolled house price inflation, which might then spark an asset price bubble. There are no reports due from the UK today as traders try to position ahead of the release of the BOE meeting minutes later this week. 

CHF

The franc extended its gains against the dollar as USD/CHF dipped to the .9100 handle. There were no reports released from Switzerland so the move was mostly a dollar reaction. There are still no reports due from Switzerland today so USD/CHF’s movement could keep relying on dollar behavior and risk sentiment. 

JPY

The yen regained ground against most of its major counterparts, as investors believed that a correction was in the cards after consecutive days of rallies. The Nikkei stock index was relatively flat in yesterday’s trading, which explains why the yen managed to recover. There were no reports released from Japan then and there are none due today so the yen pairs could continue to react to Asian equities’ performance. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls edged a bit lower yesterday, as risk appetite wasn’t that strong anymore. Besides, a correction from their recent rallies was due, giving traders a chance to enter at better levels if they think the risk rallies will resume. There were no major reports released from Australia and New Zealand, while Canada printed a better than expected foreign securities purchases report. Earlier today, Australia reported a rebound in its CB leading index and released the minutes of the RBA’s latest policy meeting, which revealed that the central bank isn’t likely to cut rates anytime soon. Up ahead, we have PPI figures from New Zealand but this isn’t likely to have a strong impact on NZD price action. 

By Kate Curtis from Trader’s Way