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Dollar Falls and Sterling Awaits UK Inflation Data

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USD

On Tuesday, the Greenback declined to a 10-month low vs. a basket of major currencies, due to uncertainty over the US’s monetary policy path as well as worries that President Donald Trump could be unable to deliver his healthcare plan. The Empire State manufacturing index fell from 19.8 to 9.8 to indicate a slower pace of industry growth compared to the projected dip to 15.2.

  • The U.S. dollar index, which measures the dollar’s strength vs. six major currencies slipped to 94.75, down more than 8% from its 14-year high of over 103 reached in early January.

Only the US import prices report is due today and a 0.2% drop is eyed, smaller than the earlier 0.3% decline. 

EUR

The euro was able to hold its ground as the return of Brexit concerns in the UK drove safe-haven demand for the shared currency. Final CPI readings were unchanged at 1.3% for the headline reading and 1.1% for the core figure. The German ZEW economic sentiment index is due next and a dip from 18.6 to 17.8 is expected. The region's ZEW index is slated to fall from 37.7 to 37.2.  The single currency rose to $1.1531, up from $1.1470 earlier in the session, hitting its highest levels since May 2016.

JPY

The yen was able to get back on its feet when risk-taking paused in the latter trading sessions. Japanese banks were closed for the holiday yesterday and there are no reports due today so risk sentiment could still be in the driver's seat. Traders are awaiting the upcoming Bank of Japan (BOJ) meeting, as it is expected to postpone its projected timing for achieving the 2% inflation target, when it meets on Wednesday and Thursday. The Greenback fell to ¥111.97, its lowest level in two weeks, having lost steam after touching a near four-month high of ¥114.495 a week ago.

GBP

The pound was in a weak spot once more as Brexit negotiations took place. UK CPI is up for release today, with the headline figure projected to hold steady at 2.9% while the core reading could also stay unchanged at 2.6%. PPI input prices could chalk up a 0.8% decline while the output price could see a meager 0.1% uptick. BOE Governor Carney has a speech as well so it could bring more volatility for pound pairs. 

A quiet day for the UK economic news, the sterling pound settled at $1.307 vs. the Greenback, down slightly from its recent ten-month high of $1.311.

Today, traders are awaiting UK Retail Sales, which measures the value of sales at the retail level. Data is expected to show consumer-price inflation holding at a four-year high of 2.9% in June.

Gold

Gold prices settled after touching two-week highs in the previous session, as the greenback hovered near multi-month lows amid fading prospects for further US rate raise in 2017.

 The Precious metal rose slightly by 0.1% to settle at $1,234.48, after hitting its highest since July 3 at $1,235.94 in the previous session.  Technically, the yellow is unlikely to settle above these levels since there were no other major drivers.

 Oil

Oil prices stabled at the beginning of the day backed by strong consumption but weighed by ongoing high supplies from producer the United States and OPEC.

Brent crude futures rose as much as 0.3 % or 13 cents to settle at $48.55, from their last close, while U.S. West Texas Intermediate (WTI) crude futures settled at $46.12.

The most important economic events:

  • GBP Core Consumer Price Index (YoY) (JUN): (GMT 08:30) – Important – Forecast (2.6%) – Previous (2.6%).
  • GBP Consumer Price Index (YoY) (JUN): (GMT 08:30) – Important – Forecast (2.9%) – Previous (2.9%).
  • EUR Euro-Zone ZEW Survey (Economic Sentiment) (JUL): (GMT 09:00) - Important – Forecast (N/A) – Previous (37.7).
  • EUR German ZEW Survey (Economic Sentiment) (JUL): (GMT 09:00) - Important – Forecast (18) – Previous (18.6).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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