Fundamentals: Daily Forex Analysis – May 14, 2015

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Fundamentals: Daily Forex Analysis - May 14, 2015

The US dollar returned some of its recent forex wins as risk appetite somewhat improved in the markets and traders also booked profits ahead of the US retail sales release today. Data from the US economy was weaker than expected, as the JOLTS job openings came in at 4.99M versus expectations of a climb from 5.14M to 5.16M. The headline retail sales reading might show a 0.3% uptick for April while the core version of the report could print a 0.4% increase. Stronger than expected data could allow the dollar to recover while weak results could push it lower.

The euro popped a bit higher despite the lack of reports released from the euro zone since Greece was able to make its repayment to the IMF yesterday. Euro zone preliminary GDP readings are up for release today, with Germany likely to print a 0.5% growth figure and France expected to show a stronger 0.4% expansion compared to its previous GDP. The euro zone flash GDP is expected to come in at 0.5%, higher than the previous 0.3% expansion and enough to support Draghi’s claims that a sustained recovery is taking hold.

Forex Market Reports

The pound extended its rally in yesterday’s forex trading sessions thanks to stronger than expected UK manufacturing production data. The report showed a 0.4% gain, higher than the projected 0.3% uptick, while the previous reading was upgraded to show a 0.5% increase. For today, the BOE Inflation Report could add volatility among pound pairs, along with the UK claimant count change release. The jobs report could show a 20.1K decline in joblessness, which could bring the jobless rate down from 5.6% to 5.5%.

The franc gave back some of its recent wins, as there were no reports to allow the currency to extend its climb. There are still no major reports lined up from Switzerland today, although the franc might take its cue from euro zone GDP data and follow the reaction of the shared currency.

The yen weakened to most of its forex rivals when risk appetite picked up during the Asian trading session. BOJ Governor Kuroda spoke in front of parliament and clarified that he is not looking to cut interest rates on excess reserves parked in the central bank’s vault. Earlier today, Japan’s current account balance came in better than expected at 2.07T JPY versus the estimated 1.34T JPY surplus.

The Kiwi was still in a weak spot in recent forex trading but the Aussie got a boost from upbeat housing data and positive remarks from Fitch regarding the country’s credit rating. Australia also released its government budget and this was taken positively by the Aussie. Chinese industrial production numbers and retail sales data are up for release 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.