USD

The dollar carried on with its recovery on Thursday, as risk remained off but traders started pricing the possibility that Washington will come up with a budget deal over the weekend. 

Profit-taking scenarios similar to last week’s dollar rallies on Friday could take place in anticipation of a deal in the next few days. As for data, US initial jobless claims came in worse than expected at 374K versus the estimate at 307K. For today, US preliminary UoM consumer sentiment data is up for release and a small dip from 77.5 to 77.2 is eyed. 

EUR

The euro lost ground to the dollar during yesterday’s Asian session but managed to make a good comeback during the London session. Data from the euro zone was actually weaker than expected, as French industrial production fell short of consensus. Only medium-tier reports are due from the region today and these aren’t likely to spur huge moves among euro pairs. 

GBP

The pound was stuck in consolidation prior to the BOE interest rate decision. The pairs made a bit of headway afterwards, as the central bank decided to keep monetary policy unchanged. They kept rates on hold at 0.50% and their asset purchase program at 375B as expected. Only the UK CB leading index is due today and a small uptick is expected, but a weaker than expected reading might undermine pound strength. 

CHF

The franc struggled to reverse its recent losses to the dollar, as USD/CHF tested the .9100 handle. There were no reports released from Switzerland yesterday and none are due today, which suggests that USD/CHF movement could be driven by U.S. events or potential profit-taking ahead of the weekend. 

JPY

The yen lost ground to its counterparts as the Nikkei stock index posted some gains. USD/JPY rallied to the 98.00 area while CAD/JPY broke above the 94.00 mark. BOJ Governor Kuroda is set to give a speech today and possibly spur some volatility among yen pairs. No other major events are lined up for Japan. 

Commodity Currencies (AUD, NZD, CAD)

  The comdolls lost ground to the dollar as risk aversion set in while dollar sentiment improved. Jobs data from Australia was mixed, with a better than expected jobless rate of 5.8% but a weaker than expected rise in hiring. Canada’s housing price index came in weaker than expected, deepening the Loonie’s slide. There were no reports released from New Zealand yesterday and none are due today. Canada will print its jobs data and possibly show slower hiring of 15.3K versus the previous 59.2K figure. 

By Kate Curtis from Trader’s Way