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Forex Major Currencies Outlook (April 23, 2013)


The dollar still seems to be benefitting from safe-haven flows lately although its rallies have somewhat subsided. After all, some traders are still wary of weak economic data from the U.S. which might trigger an extension or an increase of the Fed's ongoing asset purchases. New home sales, flash manufacturing PMI, and Richmond manufacturing index are set for release in today's New York session and weaker than expected figures might weigh on the Greenback.


The political situation in Italy has stabilized in the recent days yet mixed euro zone PMI figures are still dragging euro pairs down. Earlier today, French manufacturing and services PMI came in a little higher than expected while still in the contractionary zone. However, German manufacturing and services PMI both disappointed and showed deeper contraction in the industries. Overall, the region's manufacturing and services figures came close to expectations but both are still far from the expansionary zone.


Only the CBI industrial order expectations figure is due from the U.K. today and this report isn't likely to result in huge price moves among pound pairs because traders are waiting on the Q1 2013 GDP release later on in the week. Traders could price in their expectations as early as today, especially if the CBI industrial orders report disappoints, as it would highlight the economic weaknesses in the country.


There are no reports due from Switzerland today as Swissy pairs could take their cues from euro zone data, which came in mixed for today. The instability in euro zone could weigh on the franc because of the economic ties and proximity of euro zone and Switzerland.


Japan's economic schedule is also empty for today as traders gear up for the BOJ interest rate decision later on in the week. Yen pairs seem to be forming double top formations on longer-term time frames, indicating potential reversals.

Commodity Currencies (AUD, CAD, NZD)

The commodity currencies are seeing further signs of weakness today as China just printed a weak manufacturing PMI. This is pushing AUD/USD even closer to the 1.0200 major psychological level and NZD/USD below the .8400 mark. Canadian retail sales are due in today's New York session and the chance of a downside surprise is high because of the weak jobs data in the same month. Core retail sales are expected to rise by 0.5% while headline retail sales could see a 0.3% uptick. BOC Governor Carney is also set to testify later on, which might provide more volatility for USD/CAD.