Forex Majors Outlook: JPY Trade Gearing Up For BOJ Rate Decision

The dollar still seems to be benefiting from safe-haven flows lately, although its rallies have subsided somewhat. After all, some traders are still wary of weak economic data from the U.S., which could trigger an extension or an increase of the Fed’s ongoing asset purchases. New home sales, flash manufacturing PMI and the Richmond manufacturing index are set for release in today’s New York session. Weaker than expected figures might weigh on the Greenback.
EUR
The political situation in Italy has stabilized in recent days, yet mixed eurozone 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, showingdeeper contraction in the industries. In general, the region’s manufacturing and services figures came close to expectations but both are still far from the expansionary zone.
GBP
Only the CBI industrial order expectations figure is due from the U.K. today. This report isn’t likely to result in huge price moves in pound pairs, as traders are waiting on the Q1 2013 GDP release later in the week. Traders could price in their expectations as early as today, especially if the CBI industrial orders report disappoints.
CHF
There are no reports due from Switzerland today. Swissy pairs could take their cues from eurozone data, which came in mixed for today. The instability in the eurozone could weigh on the franc due to the economic ties and proximity of eurozone and Switzerland.
JPY
Japan’s economic schedule is also empty for today. Traders are gearing 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 the AUD/USD even closer to the 1.0200 major psychological level, and the NZD/USD below the .8400 mark. Canadian retail sales are due in today’s New York session. The chance of a downside surprise is high due to weak job 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, which might provide more volatility for the USD/CAD.