USD
The US dollar was able to make a quick bounce in the Asian session but gave up its intraday gains back to its major counterparts, as the lawmakers in Washington still haven’t reached a deal on the budget.
This means that the shutdown in the government has carried on for more than a week, weighing on overall economic growth. Data from the US was weaker than expected, as the NFIB small business index fell from 94.1 to 93.9 instead of improving to 95.2. FOMC meeting minutes are up for release today and it will be interesting to see how the U.S. government shutdown factored in the Fed’s decision back in September.
EUR
The euro struggled to hold on to its current levels against the dollar and the yen yesterday, as data came in mixed. Germany’s trade balance printed a stronger than expected reading but the gains from this report were wiped out by the weaker than expected factory orders release. German industrial production data is up for release today and a 1.1% increase is expected. Draghi is set to give a speech and possibly cause some volatility for euro pairs around 11:00 pm GMT.
GBP
The pound suffered a sharp selloff at the start of the London session, as a news report erroneously said that the BOE implemented additional LTRO when it just turned out to be their normal repo operations. Pound pairs were able to recover to their previous levels instantly, although there were no major reports released from the UK around that time. For today, UK manufacturing production and trade balance numbers are up for release. Manufacturing production could show a 0.3% increase while the trade balance could show a smaller deficit.
CHF
The franc was simply stuck in consolidation against the euro and the dollar, despite the round of strong data from Switzerland. CPI came in at 0.3% versus the estimated 0.2% reading while retail sales printed a 2.4% jump instead of the 1.7% projected increase. The jobless rate held steady at 3.2% as expected. No reports due from the franc today could mean more consolidation for USD/CHF and EUR/CHF.
JPY
The yen was able to rake in some more gains against its counterparts, as the lower-yielding Japanese currency kept benefitting from risk aversion. USD/JPY edged lower during the U.S. session and so did EUR/JPY. The Economy Watchers sentiment index printed a higher than expected reading of 52.8, also an improvement over the 51.2 reading seen previously. For today, BOJ monetary policy meeting minutes are up for release along with the preliminary machine tool orders report.
Commodity Currencies (AUD, NZD, CAD)
AUD/USD and NZD/USD were mostly stuck in their current ranges while USD/CAD had an upside breakout on the heels of weak Canadian data. The trade balance widened to 1.3 billion CAD versus the estimated drop to 0.7 billion CAD, while the previous reading was revised to show a larger deficit. Westpac consumer sentiment data in Australia released earlier today printed a 2.1% decline, weighing on AUD/USD in today’s early Asian session. New Zealand will be printing its Business NZ manufacturing index at 11:00 pm GMT.
By Kate Curtis from Trader’s Way
