Forex Trading Library

Forex Afternoon Wrap – 19/08

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US CPI stable at 1.8%, focus shifts to FOMC Meeting Minutes

Key Notes:

  • New Zealand PPI Input q/q -0.3% vs. -0.5%; PPI Output q/q -0.2% vs. -0.2%
  • Japan trade balance -0.37Tn vs. -0.16Tn
  • Australia MI leading index m/m 0.0% vs. 0.0% previously
  • Japan all industries activity m/m 0.3% vs. 0.4%
  • Eurozone current account 25.4bn vs. 19.2bn
  • US CPI m/m 0.1% vs. 0.2%; Core CPI m/m 0.1% vs. 0.2%
  • US CPI y/y 0.2% vs. 0.2%; Core CPI y/y 1.8%

Later

  • Crude Oil inventories
  • FOMC meeting minutes

The Asian markets opened on a soft note this morning with the New Zealand PPI data on the tap. The quarterly producer price index fell less than expected to -0.3% and -0.2% respectively. The Kiwi was muted to the news however as the currency attempted to post a session high to 0.66 before giving up its gains into the US trading session. NZDUSD was down -0.54% for the day. The Aussie also saw subdued trading for the most part as the currency previously tested the lows of 0.7315 before posting a session high to 0.7362 ahead of the US trading session. The Yen was flat for the most part and was seen trading within yesterday’s range.

The European session saw the German lawmakers approve the Greek bailout terms, despite rising opposition. The votes for the Greek bailout however overwhelmed with 454 – 113 and 18 abstaining from the vote. With most of the major Eurozone national parliaments clearing the way for the Greek bailout, the country will face its first repayment due tomorrow to the ECB. The Euro was trading mostly mixed albeit subdued against the Greenback. EURUSD attempted to stage a rally today but failed near the session highs just below 1.1073 and turned lower to trade near the daily open. EURUSD was mostly flat at the time of writing.

GBPUSD did not move much today after posting strong gains yesterday on account of a pickup in inflation. GBPUSD posted session highs to 1.56935 before falling back to trade near the day’s open. There was no major economic data due from the UK today with the monthly retail sales data due out tomorrow, which could likely bring more momentum into the GBP markets.

The US trading session saw the monthly inflation data being released. Overall, it was a mixed bag as the headline and core CPI grew at a softer pace of 0.1% respectively for the month. On an annualized basis, Core CPI managed to remain unchanged at 1.8%. The markets initially reacted bullishly to the news on a weaker Greenback, but soon gave up its gains as the US Dollar Index briefly tested the session lows to 96.66 before trading higher albeit flat for the day.

The markets could continue with the theme, trading flat until the FOMC meeting minutes are released later in the evening. Investors will be looking to clues from the July’s meeting minutes on the rate hikes however, there is a big change that the markets could be disappointed especially in light of the Yuan devaluation which occurred last week.

The weekly Crude oil inventories report is also due later in the evening. Crude oil prices were trading 0.07% higher for the day after testing the lows of 42 yesterday.

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