UK CPI beats estimates rising hopes for the BoE hawks to vote for rate hikes
Key Notes:
- RBA releases monetary policy meeting minutes
- Australia new motor vehicle sales -1.3% vs. 3.9% previously
- UK CPI y/y 0.1 vs. 0.0%; Core CPI y/y 1.2% vs. 0.8%
- UK PPI input m/m -0.9% vs. -1.8%; PPI output m/m -0.1% vs. -0.1%
- US building permits 1.12Mn vs. 1.23Mn; m/m -16.3%% vs. -8.2%
- US housing starts 1.21Mn vs. 1.19Mn; m/m 0.2% vs. 0.5%
The commodities were the latest markets to fall victim to the Yuan devaluation as Oil and Copper fell sharply in early trading. The Shanghai benchmark index was also down posting a steepest three week decline. The current moves in the markets are fuelling speculations that there could be intervention in the markets from China.
In the currency markets, the Asian trading session was quiet but the Aussie and the Kiwi were trading subdued alongside the slump in the commodity markets. The RBA released its monetary policy meeting minutes which did not give away too much information. The RBA’s minutes were seen as being largely positive for the markets, but the commodity slump failed to boost the Aussie. AUDUSD was down -0.59% for the day falling off the session highs near 0.736. The NZDUSD was flat ahead of the Global dairy trade data due for release later in the evening. USDJPY was trading flat for the day although the currency is under pressure after posting daily lows near 124.183.
The European trading session was quiet with the exception of the UK monthly CPI numbers. Data released by the ONS showed that inflation picked up broadly in the UK rising 0.1% on the headline and 1.2% on the core on an annualized basis. The pickup in inflation saw a broad rally in the Pound Sterling as the Cable was seen breaking the resistance near 1.57 to open up for a test to the next resistance at 1.58.
The Euro remained subdued across the board and was trading weaker for the day losing -0.39%. The pair was however seen hovering near 1.105 before breaking lower in the US trading session.
The US markets opened to the housing starts and building permits data. While building permits fell -16.3% for the month, housing starts managed to rise 0.2%. The mixed numbers saw bullish reaction from the US Dollar Index, which was trading higher, 0.15% for the day.
There are no other economic releases scheduled for the day. In other news, the Federal Reserve Bank of Dallas will see Robert Steven Kaplan replace Richard Fisher as the central bank governor next month. Kaplan’s term comes amidst new presidents taking office including the Philadelphia Fed’s new governor Patrick Harker. The Minneapolis Fed is also looking to appoint a new president when Narayana Kocherlakota steps down from his post.
