Can US Data Deliver for the Dollar?

Boris Schlossberg BKTraders and Prop Traders Edge

Market Drivers October 12, 2017
Carry trades rally
EZ Industrial Production improves
Nikkei 0.35% Dax 0.01%
Oil $51/bbl
Gold $1294/oz.

Europe and Asia:
AUD Home Loans 1.0% vs. 0.5%
EUR EZ IP 1.4% vs. 0.5%

North America:
USD PPI 8:30
USD Jobless Claims 8:30
EUR Draghi 10:30

It’s been another quiet night in FX market today with most of the majors contained to 30 pip ranges. The one exception was the high yielder commodity dollars which saw a steady rise in Asian and early European trade in the wake of yesterday’s FOMC minutes.

Although the FOMC minutes essentially reaffirmed that the Fed was on the path to hike rates in December, they also showed that there was a wide range of opinions amongst the members with many still concerned about the lack of inflation in US economy. The net takeaway for the FX market was that the overall tightening path of US policy is likely to be much less aggressive, especially if as some members argued, disinflation is a secular rather than a cyclical phenomenon.

The shift in sentiment helped spur some buying of high yielders as both Aussie and kiwi rose in Asian trade with the former popping all the way to .7836 before finding some resistance. The AUDUSD was also helped by better home loan data and higher readings on inflation expectations.

Nevertheless, the rise in commdollars remains a short covering rally within a broader downtrend and if today’s US PPI data proves hotter than forecast, they may give up some of their overnight gains as US yields are likely to improve.

The price action in North America is likely to remain subdued as trader look to tomorrow’s CPI and Retail Sales data which should provide a much better gauge of both inflation and growth potential in the US economy and could revive the dollar rally if both reports beat their mark. The possible event risk on the docket is Mario Draghi’s participation on a panel in Washington DC about Macro policy issues. If Mr. Draghi makes any off hand remarks about QE taper, the EURUSD could quickly pop to 1.1900 as a result.

Author

Boris Schlossberg

BKTraders and Prop Traders Edge

Boris Schlossberg was key speaker at the FXstreet.com International Traders Conferences 2010. Mr. Boris Schlossberg is a leading foreign exchange expert with more than 20 years of financial market experience.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.