Foreign Exchange Trading Fundamentals: Comdolls Stay Resilient – June 11, 2014

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Foreign Exchange Trading Fundamentals: Comdolls Stay Resilient - June 11, 2014

The comdolls stayed resilient in yesterday’s foreign exchange trading sessions despite risk aversion taking over most of forex price action. Strong Chinese CPI was enough to keep these currencies supported, as the promise of a pick up in the world’s second largest economy could be good for commodity exports. In Australia, Westpac consumer sentiment saw a 0.2% uptick and gave further support for the AUD. Later on, the RBNZ will announce its rate decision and a rate hike might be enough to support the potential uptrend among Kiwi pairs. No policy change, on the other hand, might push NZD lower.

The US dollar dominated in recent foreign exchange trading sessions, particularly against the euro and the pound. Against the yen though, the Greenback gave up most of its recent gains. Medium-tier data from the US economy was mixed, as the JOLTS job openings data came in higher than expectations while the wholesale inventories figure was weaker than expected. Data on crude oil inventories and the Federal budget balance are up for release today, both of which aren’t expected to make a huge impact on dollar movement.

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Foreign Exchange Trading Analysis

The euro resumed its selloff to the dollar and the yen in yesterday’s foreign exchange trading sessions, despite euro zone data printing in line with expectations. French industrial production showed a 0.3% gain while Italian industrial production marked a 0.7% increase. There are no reports due from the euro zone today, which suggests that the shared currency could be driven mostly by market sentiment.

The pound showed signs of weakness in recent foreign exchange trading when the U.K. manufacturing production report simply came in line with expectations of a 0.4% uptick. UK jobs data is due today, with the claimant count change likely to show a 25.0K drop in unemployment and the jobless rate expected to dip from 6.8% to 6.7%. Stronger than expected data could lead to a rebound for the pound while weak figures could push the selloff deeper.

The franc gave in further to dollar strength when Swiss retail sales came in much lower than expected. The annual reading showed a mere 0.4% uptick, much lower than the estimated 2.2% figure and the previous 3.4% gain. This goes to show that Swiss consumer spending considerably weakened in recent months. There are no reports due from Switzerland today so the franc might continue to reel from the latest bleak figures.

The yen took advantage of weak economic data from most major economies and advanced to the dollar, pound, and euro in Tuesday’s trading sessions. There have been no major reports released from Japan but the run in risk aversion was enough to boost the yen. For today, core machinery orders data is due and might show a 10.8% decline due to the recently implemented sales tax hike.

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.