Daily Forex Review: US Earnings Weigh on Sentiment

Daily Forex Review: US Earnings Weigh on Sentiment

The US dollar recovered to most of its major forex counterparts in recent trading, as risk aversion returned to the markets. There have been no major reports released from the US economy, although some investors are already counting on some earnings reports to disappoint. US retail sales data is due today and analysts foresee a stronger increase in both headline and core figures. Also due today is the Empire State manufacturing index and data on import prices, but the bigger market mover might be Fed Chairperson Yellen’s speech.

Despite ECB Governor Draghi’s speech on the planned easing measures of the ECB for most of the year, the euro was able to recover from its recent lows and advance against most of its major forex counterparts. Euro zone industrial production was much weaker than expected at -1.1%  while the previous month’s figure was downgraded to show a mere 0.7% uptick. German and euro zone ZEW economic sentiment figures are up for release, with Germany expected to show a dip from 29.8 to 28.9 while the region’s index might show an improvement.


Forex Fundamental Analysis

The pound broke lower from its consolidation against most of its forex trading rivals, despite the lack of major data from the UK. Earlier today, the BRC retail sales monitor showed a 0.8% decline, leading some to worry that the BOE will backpedal from its hawkish outlook. UK CPI is up for release today and a strong reading might renew rate hike expectations and boost the pound.

The franc gave back some of its recent gains to the dollar as risk aversion peeked back in the markets. There were no reports released from Switzerland then and only the PPI is due today. Producer prices are set to show another 0.1% uptick and a stronger than expected reading might be enough to keep the franc supported.

The yen lost ground to its counterparts as risk taking was strong during the Asian trading session, with the Nikkei ending positive and the industrial production data enjoying an upward revision from 0.5% to 0.7%. There are no reports due from Japan today but the BOJ is set to announce its monetary policy decision, which might provide volatility among yen pairs.

The comdolls edged mostly sideways for yesterday’s trading sessions, as there were no major reports released from their economies. Earlier today, Chinese data on foreign direct investment and new loans came in strong and gave the Aussie a bit of support. New Zealand CPI is up for release in the next Asian session and no other reports are lined up from the comdolls until then.

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.