Daily FX Trading Update: Saudi Arabia Oil Price Cut Weighs on CAD – Nov 5, 2014

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Daily FX Trading Update: Saudi Arabia Oil Price Cut Weighs on CAD - Nov 5, 2014

The US dollar returned some of its recent FX trading gains as traders booked profits ahead of the mid-term elections, which pose a risk to dollar trends. Economic data from the US was weaker than expected, with factory orders posting a 0.6% decline, worse than the estimated 0.4% drop. US ADP non-farm employment change and ISM non-manufacturing PMI figures are due today, both of which could allow the dollar to recover if the actual results come in strong.

The euro bounced back yesterday, despite weaker than expected Spanish employment figures. Joblessness rose by 79.2K in the euro zone’s third largest economy, weighing on employment prospects in the region. Spanish and Italian services PMI are due today, with both expected to show small improvements and possibly lead to euro gains. Euro zone retail sales is also due and might have a significant impact on euro FX trading movement.

FX Trading Fundamentals

The pound had a mixed FX trading performance, despite weaker than expected construction PMI. The figure fell from 64.2 to 61.4, worse than the estimated 63.5 figure. For today, the services PMI is up for release and it might show a dip from 58.7 to 58.5. Stronger than expected data could allow the currency to recover while weak results could lead to further declines.

The franc took advantage of dollar weakness as it was able to follow the footsteps of the euro. Swiss CPI is due today and a 0.1% decline in price levels is expected to follow the previous month’s 0.1% uptick. Other than that, risk sentiment might continue to drive franc FX trading price action.

The yen was able to make a small recovery to its FX trading counterparts as some Japanese officials declared that the currency has already weakened too much. Earlier today, Japan’s average cash earnings report came in weaker than expected, resulting to a fresh round of selling for the Japanese currency. No other reports are due from Japan today.

The Aussie and Kiwi were able to bounce back in recent trading, despite another decline in the GDT index and a worse than expected dairy auction. The Canadian dollar was in a much weaker spot, thanks to a sharp decline in price levels spurred by Saudi Arabia’s decision to cut oil prices in the US. New Zealand employment change was stronger than expected at a 0.8% quarterly gain and a drop in the jobless rate from 5.6% to 5.4%. No other reports are due 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.