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I'm a currency trader with more than 10 years of trading experience. My trading framework involves both fundamental and technical analysis. Currently I'm working as a market analyst at Forex and CFD broker Trader's Way.
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  • Forex Major Currencies Outlook (March 6, 2013) 0 comments
    Mar 6, 2013 2:12 AM

    USD: Neutral

    The U.S. dollar has been losing ground to its major counterparts because of an improvement in risk sentiment lately. Overall, most economic reports have surprised to the upside, stoking investors' appetite for higher-yielding currencies. U.S. ISM non-manufacturing PMI beat expectations and climbed from 55.2 to 56.0, higher than the consensus at 55.0. There are no major reports from the U.S. today as only the factory orders and crude oil inventories data are on tap. With that, the U.S. dollar could take its cue from risk sentiment and, as long as no negative economic updates pop up, risk appetite could carry on for the rest of the trading day.

    JPY: Neutral

    Yen pairs are consolidating this week as traders sit tight prior to the BOJ rate statement. No major changes are expected but it'd be helpful to take note of the central bank rhetoric, especially since the transition period between Shirakawa and incoming head Kuroda is about to take place. For now, the Japanese yen seems to be losing because of the rebound in risk appetite but it could rally once more if market sentiment turns sour.

    EUR: Bearish

    The euro has been lifted by strong euro zone retail sales and services PMI. Retail sales surprised to the upside with a 1.2% gain for January, higher than the estimated 0.3% uptick and much better than the previous month's 0.8% decline. Services PMI in the region landed at 47.9 for February, up from the previous 47.3 figure, showing that the contraction was slower than estimated. No major reports are set for release from the euro zone right now, which suggests that traders could start pricing in expectations for tomorrow's ECB rate statement.

    GBP: Bearish

    U.K. services PMI surprised to the upside for February as the index climbed from 51.5 to 51.8 during the month, reflecting stronger expansion in the industry. This was higher than the estimated 51.5 reading for the month. Cable rallied right after the release but was unable to sustain it past the 1.5200 major psychological resistance. BOE Governor Mervyn King is set to give a speech at 9:45 am GMT today and possibly drop some hints about the upcoming BOE rate decision. Take note that he just shifted his stance and sided with the doves during the previous monetary policy decision, but he isn't likely to announce a huge monetary policy adjustment prior to his exit from the central bank.

    AUD: Bullish

    The Australian dollar has been benefitting from the RBA's decision to keep rates unchanged yesterday, along with the positive surprise in retail sales. Australia's GDP came in line with expectations and showed 0.6% growth in Q4 2012 while the previous quarter's figure was revised up from 0.5% to 0.7%, reflecting a larger than estimated expansion. No other reports are due from Australia for the rest of the day and, unless there is a significant shift in market sentiment, AUD/USD could carry on with its rally.

    NZD: Bullish

    There haven't been any major reports from New Zealand so far and there aren't any due for the rest of the week. The New Zealand dollar has been finding support from strong Australian economic data as NZD/USD looks poised to break above the .8300 major psychological level.

    CAD: Bearish

    The BOC interest rate decision is scheduled today and incumbent BOC head Carney is expected to retract some of his usual upbeat remarks. While he used to talk about how rate hikes were imminent in the past, weak Canadian data forced him to tone down his hawkishness in his previous rate statement. After that, Canada continued to print weak economic reports, which suggests that Carney could be even more dovish this time around. The Canadian Ivey PMI is also set for release later on and the report could show a slowdown in manufacturing activity for February. The index is expected to dip from 58.9 to 56.2 during the month, which could weigh on the Loonie. A weaker than expected reading could trigger a sharp selloff for the Canadian dollar.

    CHF: Neutral

    USD/CHF has been stuck around the .9400 major psychological level for now as there is no significant catalyst from Switzerland so far. There are no reports due today but traders might start pricing in expectations for tomorrow's SNB rate statement. SNB head Jordan has been very vocal about the central bank's desire to keep the franc's rallies at bay, which could be interpreted as willingness to conduct further monetary policy easing.

    By Kate Curtis from Trader's Way

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