Daily FX Trading Update: EUR Slumps on Weak CPI Estimates – Mar 1, 2016

Daily FX Trading Update: EUR Slumps on Weak CPI Estimates - Mar 1, 2016
The US dollar wasn’t able to establish a clear direction in recent sessions, as it simply reacted to other currencies’ price action. Data from the US economy came in mostly weaker than expected, as the Chicago PMI fell from 55.6 to 47.6 while the pending home sales report printed a sharp 2.5% drop. For today, the US ISM manufacturing PMI is due and a rise from 48.2 to 48.5 is eyed.
The euro suffered a sharp tumble in recent sessions when the euro zone flash CPI readings missed expectations. The headline figure showed a 0.2% drop instead of the estimated flat reading while the core figure fell from 1.0% to 0.7%. Final PMI readings from the top economies are due today, along with the German unemployment change and euro zone unemployment rate.
The pound managed a quick bounce in recent trading, as traders likely booked profits off their previous short positions when UK medium-tier reports came in line with expectations. UK manufacturing PMI is due today and a drop from 52.9 to 52.3 is eyed.
The franc advanced against its forex counterparts when the Swiss KOF economic barometer beat expectations. The reading rose from an upgraded 100.4 figure to 102.4 instead of dipping to the projected 99.1 reading. Swiss retail sales data is due today and a 1.2% decline is eyed, a slight improvement from the previous 1.6% drop.
The yen continued to gain ground against its forex rivals as risk aversion was in play during the Asian session. Data from Japan was mixed, with retail sales down 0.1% and preliminary industrial production up by 3.7%. Household spending slumped 3.1% while the unemployment rate dipped from 3.3% to 3.2%.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were mostly stuck in consolidation ahead of this week’s top-tier data. Reports from China fell short, as the official and Caixin PMI readings indicated a slower pace of growth in the services sector and a sharper contraction in the manufacturing industry. The RBA statement is up next and no rate changes are expected. As for New Zealand, the GDT auction could show if another fall in dairy prices was recorded.


To contact the reporter of the story: Samuel Rae at samuel@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.