What impact will CPI have on the outlook for the USD next week?

Giles Coghlan LLB, Lth, MA Financial Source

On Tuesday this week, markets were given a snapshot view of what will happen when the US actually do signal a rise in interest rates. It came about after Treasury Secretary Janet Yellen spoke about the need for the US to raise interest rates. Now the comment was taken out of context, but the market reaction was telling. Markets saw a sharp spike higher in the dollar, US 10 year yields, and downside in gold. This is a dry run rehearsal for what will happen if the Federal Reserve do signal tapering bond purchases this summer. Wise investors will take note for future reference.

Other key events from the past week

AUD: Interest Rate Statement, May 04: The RBA meeting this week was uneventful. The RBA kept the cash rate and three-year yield target unchanged at 0.10% while also keeping its QE program the same. However, labour data remains a key focus for the RBA going forward.

GBP: Interest Rate Statement, May 06: The decision was as expected with interest rates unchanged & asset purchases too. However, looking at the minutes, it is important to note that the BoE has adopted an optimistic outlook for the UK economy. This could provide support for the FTSE 100 from here.

FTSE100: Re-opening gains, May 06: Global indices fell lower on Tuesday, but there was no clear catalyst for the falls. As a result dip buyers stepped in. Some analysts consider the FTSE 100 to remain undervalued and is on course to fill the gap to 7500 by year-end on re-opening gains. Will that be the case?

Key events for the coming week

USD: Inflation data, May 12: The Federal Reserve expects a temporary spike higher in inflation. However, a sharp move higher may have investors pricing in an early US interest rate rise which would support the USD.

Silver: Market in focus, May 15: The silver market is in keen focus right now as the investment group Crescat Capital maintain their bullish bias for the commodity. As long as the price remains above the key support level at 25.80 that should support buyers in the near term.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.