Daily FX Trading Update: Risk Appetite Back in the Market? – July 10, 2015

Daily FX Trading Update: Risk Appetite Back in the Market? - July 10, 2015

The US dollar returned most of its recent gains in yesterday’s trading sessions when risk appetite started to improve. News that the Greek government is gearing up to submit a revised economic reform plan lowered the odds of a Grexit while the recovery in Chinese equities also prevented further capital flight. Initial jobless claims came in worse than expected at a reading of 297K versus the projected 274K figure. For today, Fed Chairperson Yellen is set to give a speech and possibly push dollar pairs around.

The euro had a positive day when the Greek government made an effort to revise their reform proposal to be more in tune with their creditors’ demands. Data from the euro zone came in better than expected, with Germany printing a larger trade surplus. For today, French and Italian industrial production figures are due but the market focus could be on the updates leading up to the end of the Greek five-day ultimatum.

The pound was still generally weaker compared to most of its forex counterparts despite the pickup in risk appetite yesterday. The BOE didn’t make any monetary policy changes as expected while today has the trade balance and construction output figures on tap.

The franc regained ground against its forex rivals, as it followed in the euro’s footsteps. There have been no reports released from Switzerland yesterday and there are no reports lined up for today, leaving the franc dependent on euro trade flows again.

The yen gave up its recent wins when risk aversion retreated in the markets. Positive developments in China and Greece eased some of the fears in the markets while weak PPI figures from Japan also spurred yen weakness. Producer prices fell by 2.4% versus the projected 2.2% decline year-over-year in June. No other reports are due from Japan, which means that yen pairs could continue to move to the tune of risk sentiment.

Commodity Currencies (AUD, NZD, CAD)
The comdolls saw a strong recovery in the past trading sessions as higher-yielding currencies took advantage of risk appetite. Data from Australia came in better than expected, as the economy added 7.3K jobs in June versus the projected 2.1K decline. Chinese CPI also came in better than expected at 1.4% versus the projected climb from 1.2% to 1.3%. Earlier today, Australia reported a 6.1% slump in home loans. Later on Canada is set to print its jobs figures and possibly show a 9K drop in hiring.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com