USD: BullishThe U.S. is set to release its retail sales report for February at 1:30 pm GMT today. The headline figure could show a 0.5% increase while the core version of the report could also show a 0.5% uptick as well. Take note that the U.S. NFP for February came in much stronger than expected as the economy added 236K jobs during the month, effectively bringing the jobless rate down from 7.9% to 7.7%. Jobs growth tends to result in stronger consumer spending, which hints at a potential upside surprise for the U.S. retail sales figures. Positive U.S. data has been boosting the Greenback these days as markets are trading on fundamentals.
EUR/USD has been holding its ground above the 1.3000 major psychological level as it continues to move mostly sideways for the week. Perhaps the lack of economic events and political updates from the euro zone is to blame for the pair’s range-bound behavior, which could continue unless we see a significant shift in market sentiment.
Although there are no major reports from the U.K. today, yesterday’s weak manufacturing production release could be enough to trigger another round of pound selling. The report chalked up a surprisingly huge 1.5% decline for January, its steepest decline in months, instead of staying flat during the period. This increases the odds that the country will suffer another economic contraction this quarter, putting the U.K. back in a technical recession.
Commodity Currencies (AUD, CAD, NZD): Bullish
AUD/USD just broke above the 1.0300 major psychological level yesterday as traders started pricing in positive expectations for the Australian employment report due tomorrow. Meanwhile, NZD/USD is still stuck in a range as traders await the actual RBNZ interest rate decision. Rumor has it that RBNZ head Graeme Wheeler is mulling a rate cut just to keep the Kiwi’s gains in check but other analysts expect no changes in monetary policy at all. If that’s the case, NZD/USD could rally back up to the .8300 major psychological resistance and even make a break above that.
The yen has been staying afloat so far this week as traders are still uneasy about buying up higher-risk currencies. Data from Japan has been mixed though as manufacturing showed an improvement while the services sector posted a downturn. No major reports are due from Japan today as the yen could be extra sensitive to risk sentiment as usual.
By Kate Curtis from Trader’s Way