Market themes of the Day: Carney and US retail sales in focus on Friday

Mario Blascak, PhD Independent Analyst

What you need to know before markets open
Main themes:

The US inflation decelerating below expectations became the biggest mover on Thursday as Trump’s tariffs are beginning to bite into the economic environment.
Both The Bank of England and the ECB kept the monetary policy unchanged with ECB confirming the lower level of asset purchasing from October with the end of purchasing in December this year. For details read my Bank of England Analysis here and Yohay’s ECB Analysis here.
Turkish central bank hiked rates by 625 basis point to 24.00%, disregarding earlier calls from Turkey’s President Erdogan.
Japan’s Prime Minister Shinzo Abe said he does not think easing should go on forever. “I want BoJ to deal thoroughly with price stability target, I have trust in BoJ Governor Kuroda,” Abe said.

China

China’s industrial production rose 6.1% slightly above expectations for August.
China’s retail sales rose 9.1% in line with expectations for August.
China’s fixed investment rose 5.3% below expectations for August.

Europe

The ECB kept the monetary policy unchanged in line with expectations with Draghi solid on the path of asset purchasing program reduction to €15 billion in October and pulling it all back by December this year. For more details read Yohay’s analysis here.
The Eurozone trade balance is expected to have diminished to €18.0 billion in July from €22.5 billion in June.

UK
The Bank of England decided to keep monetary toolkit unchanged in line with expectations with the unanimous voting pattern. For more details read my Analysis here.
The Bank of Canada Governor Mark Carney is scheduled to give the Whitaker Lecture at the Bank of Ireland, in Dublin at 10:00 GMT, but given the BoE meeting, he is unlikely to change the tone.
US & Canada
The US core CPI decelerated above expectations to 2.2% y/y dragging the US Dollar lower across the board.
The US core retail sales are set to rise 0.5% m/m in August while the control group included in the GDP report is seen rising 0.4% m/m. For more detail read Valeria’s Preview here and learn how to trade it with EUR/USD here.

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

EUR/USD: Gains remain capped by 1.1650

EUR/USD remains in recovery-mode following the closing bell in Euroland on Wednesday, hovering around the 1.1650 zone amid renewed downside pressure on the US Dollar and a marginal improvement in the global sentiment.

GBP/USD appears bid around 1.3370

GBP/USD reverses part of its recent multi-day decline, gathering some balance and managing to reach the 1.3400 region, where some initial resistance seems to have turned up. Cable’s uptick comes in response to some loss of momentum in the Greenback despite the geopolitical scenario remaining fragile.

Gold recovers modestly despite intensifying Middle East crisis

Gold keeps its daily gains well in place, although a break above the $5,200 mark per troy ounce still remains elusive on Wednesday. The yellow metal’s rebound comes in response to the persistent flight-to-safety amid intense geopolitical tensions in the Middle East and the bearish performance of the US Dollar.