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Forex Major Currencies Outlook (March 27, 2013)


It's the middle of the trading week and the potential for midweek reversal is pretty high, considering markets are nearing the end of the month and the end of the quarter. Profits might be booked early, which could lead to sharp reversals within the day, as some banks are on a shortened trading week. Only the pending home sales and crude oil inventories data are due from the U.S. today and these aren't likely to have a huge impact on dollar price action.


Only a few medium-tier reports were released from the euro zone this London session. The GfK German consumer climate report came in line with consensus as it posted a 5.9 reading, also unchanged from the previous month. German import prices came in better than expected at 0.3% versus the 0.2% estimate while the Italian retail sales report missed expectations and posted a 0.5% decline. The Italian bond auction is also going on today and the bond yields and demand for Italian bonds would indicate whether investor confidence was restored in the region or not.


The U.K. current account fell below expectations in the last quarter of 2012 as the reading came in at -14.0 billion GBP instead of the estimated -12.8 billion GBP. On top of that, the previous quarter's figure was revised down from -12.8 billion GBP to show a larger deficit of -15.1 billion GBP. Meanwhile, the final GDP for the last quarter of 2012 didn't undergo any revisions whatsoever. The reading is still at -0.3%, confirming that the U.K. is in danger of a triple-dip recession in case the next GDP for this quarter comes in negative.


Switzerland just reported a weak KOF economic barometer reading of 0.99 instead of the estimated 1.07 figure. This is also weaker than the previous period's 1.04 reading, reflecting a downturn in economic sentiment. No other reports are due from Switzerland today.


Japan is set to print its retail sales report in the upcoming Asian session. The annual figure is projected to rebound from -1.1% to 0.9%, showing a recovery in consumer spending. Weaker than expected data could show that consumers are still hesitant to spend, which could push the BOJ to implement further stimulus later on.

Commodity Currencies (AUD, CAD, NZD)

New Zealand's ANZ business confidence figure posted a decline from 39.4 to 34.6 in February, reflecting a drop in confidence for the period. Meanwhile, Canada is set to release its CPI reports during today's New York session. Both core and headline figures are expected to tick higher for February, with the headline figure seen to rise by 0.6% and the core figure expecting a 0.3% increase. Also keep an eye out for the crude oil inventories report which usually triggers a reaction from the oil-related Canadian dollar.