Daily Forex Review: US Dollar Retreats – July 9, 2014

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Daily Forex Review: US Dollar Retreats - July 9, 2014

Daily Forex Review: US Dollar Retreats - July 9, 2014

The dollar was weaker across the board as risk appetite picked up and US data came in mixed in the latest forex review. JOLTS job openings came in stronger than expected at 4.64M but this had a minimal effect since the NFP report was released earlier. The US NFIB small business index slipped from 96.6 to 95.0 instead of climbing to 97.3, indicating weaker optimism among small business owners. US crude oil inventories and 10-year bond auction are lined up for today but the bigger market-mover might be the FOMC meeting minutes, as the Fed sounded less hawkish in their latest monetary policy statement.

The euro made a bit of a recovery in yesterday’s forex review trading sessions as Germany’s trade balance came in stronger than expected at a surplus of 18.8 billion EUR versus the estimated 15.7 billion EUR reading. However, the previous month’s data was downgraded from 17.7 billion EUR to 17.2 billion EUR. French trade balance turned out to be disappointing, as the figure clocked in a wider deficit of 4.9 billion EUR from the previous 4.1 billion EUR. There are no reports due from the euro zone today but ECB Governor Draghi is set to give a testimony that might spark more volatility among euro pairs.

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Forex Review and Forecast

The pound put up a decent fight in recent forex review trading sessions but was weighed down by bleak manufacturing production data. The report showed a 1.3% decline instead of the estimated 0.4% uptick while the previous month’s reading was downgraded to show a mere 0.3% increase. Halifax HPI is due today and another strong rise in house prices might convince the BOE to start tightening sooner rather than later, as Carney has urged.

Not even weak data was enough to stop the franc from rallying to the dollar in yesterday’s trading sessions. Swiss CPI marked a 0.1% decline in price levels and renewed fears of deflation in the economy while retail sales printed a showed a 0.6% decline instead of the estimated 1.5% gain. There are no reports lined up from Switzerland today, as the franc might take its cue from the euro or risk sentiment.

The yen advanced against its counterparts, including the US dollar, in recent trading as a BOJ official reiterated the need to meet the 2% inflation target as soon as possible. For now, it appears that the latest sales tax hike is doing the trick, which suggests that the central bank might not need to announce extra easing efforts. Japanese current account came in stronger than expected at 0.38T JPY versus the estimated 0.17T JPY surplus. There are no reports due from Japan today.

The comdolls returned some of their recent gains to the yen but advanced to the dollar in yesterday’s round of trading. There have been no major reports released from the comdoll economies yesterday, with the upcoming Chinese CPI release likely to have a strong impact on risk sentiment and comdoll movement. Consumer inflation could dip from 2.5% to 2.4% in the world’s second largest economy but a stronger than expected reading could remind traders that China is starting to pick up. Canadian housing starts data is due in today’s US session.

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.