Forex Trading Library

Forex Afternoon Wrap – 16/06

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UK CPI disappoints, but Pound Sterling continues to rally

Key Notes:

  • RBA releases monetary policy meeting minutes
  • Australia new motor vehicle sales m/m -1.3% vs. -1.5% previously
  • German Final CPI m/m 0.1% vs. 0.1%; y/y 0.7% vs. 0.7%
  • ECJ rules in ECB’s OMT favor
  • UK core CPI y/y 0.9% vs. 1%; CPI y/y 0.1% vs. 0.1%
  • UK CPI m/m 0.2% vs. 0.2%
  • UK PPI Input m/m -0.9% vs. 0.6%; PPI Output m/m 0.1% vs. 0.1%
  • German ZEW economic sentiment 31.5 vs. 37.3
  • US Housing starts 1.04Mn vs. 1.1Mn; m/m -11.1% vs. -4%
  • US Building permits 1.28Mn vs. 1.11Mn; m/m 11.8% vs. -3.5%

Later:

  • ECB’s Mersch Speech
  • ECB’s Praet Speech

The Asian trading session today saw the release of the meeting minutes from the June’s RBA monetary policy meeting. The RBA minutes revealed that the Central bank could most likely hold the interest rates steady for a few months in wake of a better than expected improvement in the GDP and the labour markets. The Aussie managed to post a session high above 0.7772 before declining to form an intraday bottom below 0.773 as the currency trimmed its losses against the Greenback.

The Kiwi was little changed and remained range bound between the highs and lows from last Friday.

The Japanese Yen started to show signs of easing after BoJ’s Kuroda clarified that his comments were not hinting to the nominal exchange rates. The USDJPY was however range bound since Monday, trading within last Friday’s high and low.

The European trading session saw the markets focusing on Greek headlines ahead of the June 18th meeting. So far, there has still been no progress on the issue which has made the Euro, single currency volatile and susceptible to breaking news and rumors. Economic data from Europe saw the German final CPI match estimates of 0.1% and 0.7% on the monthly and annual basis.

The European Court of Justice gave its verdict on the ECB’s OMT program, in ECB’s favor. The outcome was widely expected considering that the ECJ’s advisor opined earlier in January this year that the OMT program was within the mandate of the ECB and the EU commission. German ZEW economic sentiment declined to 31.5 below estimates of 37.3.

EURUSD was a bit more volatile today as the single currency posted intraday gains above 1.13 before easing lower to trade back near the 1.12 handle.

The much anticipated UK CPI data disappointed with the Core CPI rising 0.9% on an annualized basis while the headline CPI was unchanged at 0.1%. The Pound Sterling initially weakened on the news but the Cable was quick to retrace its losses to trade back up near session highs of 1.562.

The US trading session saw the release of the housing starts and building permits. While housing starts fell -11.1%, building permits rose 11.8%. The mixed housing data left the US Dollar Index practically unchanged. We expect this sideways price action to continue ahead of the FOMC’s statement tomorrow.

ECB officials are due to give their testimonies to the European Parliament later today on the Central Bank’s QE purchases and could likely keep the Euro volatile across the board.

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