Daily FX Trading Update: Weak Chinese Data Weighs on Risk – Nov. 14, 2014

Daily FX Trading Update: Weak Chinese Data Weighs on Risk - Nov. 14, 2014

The US dollar was able to squeeze out small gains to its FX trading counterparts, extending its rally to the yen and the pound. Data from the US economy was weaker than expected though, with the initial jobless claims posting a larger than expected reading while JOLTS job openings fell short of expectations. The dollar might find a clearer direction for today, with the retail sales and consumer sentiment data up for release. Headline retail sales could show a 0.2% gain while the core version of the report might also print a 0.2% rebound. Consumer sentiment is expected to improve from 86.9 to 87.3 based on the University of Michigan survey.

The euro resumed its weak bout to the dollar in recent FX trading, even as CPI readings came in mostly as expected. In Germany, the CPI showed a 0.3% decline as expected, same as in the previous month. In France, the CPI stayed flat instead of posting a 0.1% decline. For today, the GDP figures from Germany and France might have a huge say in euro movement, as these could indicate whether the region might fall into recession or not. Both top economies are expected to show 0.1% growth while Italy might reflect a 0.1% contraction. Weaker than expected data could lead to more euro selling.

FX Trading Fundamentals

The pound continued to decline against most of its FX trading rivals, as the latest BOE inflation report and the change in central bank stance weighed on the currency. Only the RICS house price balance was released from the UK yesterday and it printed a weaker than expected 20% figure versus the projected 25% reading. For today, the quarterly construction output report is due and a 3.7% rebound is eyed to follow the previous 3.9% decline.

The franc still rallied to the euro in recent FX trading, prompting many to speculate about potential SNB intervention. However, the lack of jawboning from SNB head Jordan and his men suggest that the central bank hasn’t come up with alternative measures to weaken the franc in the event the gold initiative pushes through. Swiss PPI was better than expected at a 0.1% dip versus the projected 0.2% decline. There are no reports lined up from Switzerland today.

The yen resumed its drop to most of its FX trading counterparts, although it managed to advance against the pound. Japanese industrial production data was revised slightly higher but this did very little to shore up yen demand. There are no reports due from Japan today, as the currency might move to the tune of risk sentiment.

The comdolls were hit by risk aversion when China printed weaker than expected economic data. Chinese industrial production came in at 7.7% versus the projected 8.0% gain while retail sales fell from 11.6% to 11.5%. Despite that, Chinese President Xi Jinping said that there’s no reason to be alarmed as growh in the country is stabilizing. Only the Canadian manufacturing sales report is up for release today and a 1.3% gain is expected.

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.