Currency Trading Fundamentals: Japanese Data Boosts Yen – June 9, 2014

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Currency Trading Fundamentals: Japanese Data Boosts Yen - June 9, 2014

In the previous currency trading session, the US non-farm payrolls figure came in close to expectations as it posted a 217,000 gain in hiring versus the estimated 214,000 increase. The previous month’s reading was revised slightly lower from 288,000 to 282,000 yet the jobless rate managed to hold steady at 6.3% as the participation rate improved. Average hourly earnings showed a mild 0.2% uptick, better than the previous report’s flat reading. For today, there are no major reports due from the US which means that risk sentiment might be the main driver of price action.

The euro made a small retreat on Friday’s currency trading when German industrial production came in weaker than expected, posting a 0.2% uptick instead of the projected 0.4% rebound. Trade balance was better than expected though while French trade balance also posted stronger than estimated results. German and French banks are on holiday today with only the euro zone Sentix investor confidence report due.

The pound consolidated at the end of the week as UK trade balance came in weaker than expected while consumer inflation expectations showed a decline from 2.8% to 2.6%. Only the BRC retail sales monitor is up for release today and it is expected to show an improvement from the previous 4.2% reading, which might then lead to gains for the pound.

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The franc calmed down from its recent volatile currency trading movement as Switzerland printed better than expected CPI of 0.3%. The foreign currency reserves data came in line with expectations at 444.4 billion CHF, suggesting that the SNB may still have room to defend the franc peg if needed. There are no reports due from Switzerland today as Swiss banks are on holiday.

The yen posted gains on Friday when risk appetite picked up during the Asian currency trading session. Japan’s leading indicators was better than expected at 106.6% versus the projected 106.2% reading. Over the weekend, Japan reported mixed data, with a weaker than expected current account, a stronger than expected final GDP reading of 1.6%, and a 2.3% increase in bank lending as expected. Data on consumer confidence is up for release today.

The comdolls made a pretty good rebound on Friday, except for the Loonie which suffered due to bleak Canadian jobs data. The headline figures were mostly in line with expectations yet underlying reports showed that most of the gains were just a result of part-time hiring. Canadian housing starts are due today while Australia and New Zealand have no reports on tap. Do stay tuned for RBA Governor Stevens’ speech later on though.

To contact the reporter of the story: James Brennan at james@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.