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Dollar Awaits the U.S. Inflation Data

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USD

On Friday, the Greenback touched its biggest weekly drop in more than a month vs. a basket of major currencies, erasing gains posted after the previous session's upbeat U.S. data, as traders remained cautious ahead of U.S. inflation data, which will be released later on today. Traders are awaiting the highly-anticipated U.S. inflation report to gauge the likelihood that the Federal Reserve will stick to its plan to hike interest rates again before the end of the year.

On the release front, U.S. producer prices rose in September by 0.4% after rising 0.2% in August as the price of gasoline recorded its highest increase in more than two years.

In terms of today’s data calendar, key focus will be on the highly-anticipated U.S. consumer price inflation data, which is expected to hit 0.6% from 0.4%.

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.2% at 93.036 pips.

EUR

The single currency hit its biggest weekly rise in a month as traders’ switched focus from the euro zone’s political worries to its brightening economic outlook. Meanwhile, European Central Bank decision makers agreed to expand the asset purchases program at a lower volume at their October policy meeting with views converging on a nine-month extension. The EUR/USD rose as much as 0.2%, to settle at $1.1833.

GBP

The Sterling pound rose as much as 0.33%, to settle at $1.3306 amid strong expectations that the UK could stay in the European Union for another two years. No reports are due from the UK today, so the currency may find its direction on the back of the U.S. inflation report.

Gold

Gold prices traded higher, thanks to a weak U.S. dollar ahead of U.S. inflation data due later in the day. Gold Futures - Dec 17, rose as much as 0.04%, to settle at $1,297.04.

JPY

The U.S. dollar declined by 0.14% vs. the Japanese yen and settled at ¥112.15, despite yesterday's upbeat US economic data. No reports are due from Japan today

Oil

Earlier today, Oil prices edged higher as both U.S. inventories and crude production declined, pointing towards a tightening market. Oil prices were also supported by strong Chinese oil import data. U.S. West Texas Intermediate (WTI) crude was at $51.31, 1.40%, from its last settlement, while Brent was at $57.08, up 33 1.44%.

On the political front, markets are awaiting a decision by U.S. President Donald Trump on whether to continue to ratify the 2015 Iran nuclear agreement.

Economic Calendar (all times in GMT)

  • USD Advance Retail Sales (SEP): (GMT 14:00) – Important – Forecast (1.7%) – Previous (-0.2%).
  • USD U. of Michigan Confidence (OCT P): (GMT 14:00) – Important – Forecast (95.0) – Previous (95.1).

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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