Daily FX Trading Update: Risk Appetite Weighs on USD, Lifts Commodity Currencies – Mar 24, 2015

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Daily FX Trading Update: Risk Appetite Weighs on USD, Lifts Commodity Currencies - Mar 24, 2015

The US dollar continued to lose ground against its FX trading counterparts, as risk appetite extended its stay in the financial markets. Data from the US economy was weaker than expected, with existing home sales falling short of the estimated 4.91M reading and coming in at 4.88M. Not even FOMC member Fischer’s remarks on potential tightening this year was able to lift the US dollar, as traders are still disappointed that this might take longer than initially expected. For today, US CPI readings are up for release and positive readings are expected for both the headline and core figures.

The euro continued to advance against the US dollar while sliding against most of its FX trading counterparts, as ECB Governor Draghi’s speech failed to push the shared currency in a clearer direction. German and French PMI readings from the manufacturing and services sector are lined up for today and small improvements are eyed. If the actual figures come in stronger than expected, the euro might be able to hold on to its recent gains and go for more.

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The pound also regained ground to the dollar but was still in a weak spot against most of its FX trading counterparts when data from the UK came in weaker than expected. CBI industrial order expectations showed a drop from 10 to 0 instead of landing at the estimated 9 reading. UK CPI figures are up for release today, with the headline figure likely to show a 0.1% uptick and the core figure expected to print a 1.3% increase. Stronger than expected data could allow the pound to recover while weak readings could lead to another selloff.

The franc continued to advance against most of its major FX trading counterparts, despite the lack of top-tier data from Switzerland. There are still no reports lined up from the Swiss economy today, as the franc might take its cue from euro zone reports and general market sentiment.

The yen weakened on risk appetite but managed to hold on to its recent FX trading gains to the US dollar. There have been no reports released from Japan yesterday and none are due today, indicating that sentiment continues to drive yen price action.

The comdolls took advantage of the run in risk appetite at the start of the week, as these higher-yielding currencies advanced to the yen and the dollar. Australia’s CB leading index marked a 0.4% uptick earlier today, stronger than the previous 0.3% gain. However, the Chinese HSBC flash manufacturing PMI came in weaker than expected and landed back in the contraction zone, which could force the Aussie to return its wins. No other reports are lined up from the comdoll economies today.

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.