Daily FX Trading Update: Swiss Gold Initiative Rejected – Dec 1, 2014

Daily FX Trading Update: Swiss Gold Initiative Rejected - Dec 1, 2014

The US dollar regained ground to most of its FX trading counterparts on Friday, as traders booked profits ahead of the weekend. The currency was also given a boost by the results of the Swiss referendum, as the rejection of the gold initiative led to a drop in precious metal prices and a rally for the negatively correlated dollar. There were no reports released from the US economy on Friday while today has the ISM manufacturing PMI on tap. A drop from 59.0 to 57.9 is expected, which would reflect a weaker expansion in the industry.

The euro gave up ground to the dollar but rallied to the yen on Friday, as data from the euro zone came in line with expectations. Headline CPI fell from 0.4% to 0.3% while the core CPI held steady at 0.7%. The unemployment rate in the region also held steady at 11.5% as expected. Only the Spanish and Italian manufacturing PMIs are up for release today and these might not have such a large impact on euro FX trading movement, unless the results come in way off expectations.

FX Trading Fundamentals

The pound suffered another round of selling on Friday, as there were no reports to provide the currency any FX trading support then. The Nationwide HPI came in as expected at a gain of 0.3%. The manufacturing PMI is up for release today and a decline from 53.2 to 53.0 is expected, which would reflect a weaker industry expansion. Stronger than expected results could lead to a bounce for the pound while a weak reading could lead to a sharper decline. Net lending to individuals and mortgage approvals data are also due.

The franc sold off to its FX trading counterparts as traders priced in the results of the gold referendum on Sunday. The currency also suffered a sharp selloff at the start of this trading week since the results indicated a rejection of the proposal to keep 20% of gold in SNB holdings. SVME PMI is up for release today and a drop from 55.3 to 52.9 is eyed, which might lead to more franc weakness.

The yen resumed its slide to its FX trading counterparts towards the end of the week and gained more momentum this week. Quarterly capital spending came in stronger than anticipated at 5.5% versus 2.1% while the final manufacturing PMI stood at 52.0, a notch down from the initially reported 52.1 figure. No other reports are due from Japan today.

The fall in gold prices and oil led to a sharp decline for the commodity currencies on Friday and onto the start of this FX trading week. The results of the Swiss gold referendum triggered a sharp drop for gold, which led to a corresponding decline for AUD, while the OPEC decision also sparked CAD weakness. In Australia, company operating profits saw a stronger than expected 0.5% gain, which did little to support the Aussie. China reported a drop from 50.8 to 50.3 in its official manufacturing PMI, indicating a weaker expansion. 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.