Dollar Rises By Default, US Inflation Next

Boris Schlossberg BKTraders and Prop Traders Edge

Market Drivers July 12, 2018
Trump continues to roil NATO
EZ growth cut, US inflation on tap
Nikkei 1.17%
Dax 0.32%
Oil $71/bbl
Gold $1244/oz.
Bitcoin $6190

Europe and Asia:
No Data

North America:
USD CPI 8:30

It’s been a quiet choppy night of trade in the FX market with the dollar still bid after yesterday’s breakout that saw USDJPY take out the 112.00 figure.

There was no economic data on the calendar but the euro received some bad news when the EC reduced growth estimates for the region to 2.1% from 2.3% earlier. Donald Trump’s constant pressure to renegotiate trade tariffs as well as demands for much larger increases in defense spending for NATO allies is clearly having a negative impact on sentiment in the region which may face slower growth from contraction of trade as well as higher fiscal deficits from increased defense spending.

NATO held an emergency meeting, in response to Mr. Trump’s bellicose demands yesterday as the allies scrambled for a policy solution.

With Europe pressured by Trump, UK pressured by Brexit and commodity dollars pressured by trade war fears, the greenback is rising by default for now. As long as the US economy continues to perform that dynamic should last. To that end, today’s CPI data will be the main economic event of the day with traders looking for a steady 0.2% rise. Inflation has remained steady above the 2% level keeping Fed on hawkish stance, with even such doves as Charles Evans stating that he was more inclined to hike now.

With markets entering the summer doldrums season, price action may be slow as the day progresses, although the constant geopolitical tension caused by Trump may keep markets on edge, FX appears to have settled into narrow ranges for now as traders look for fresh catalysts to trade.

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.