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Forex Today: Soft inflation data weigh on Pound Sterling and US Dollar

Here is what you need to know on Wednesday, November 15:

The US Dollar (USD) struggles to find demand after suffering heavy losses against its major rivals on Tuesday and Pound Sterling (GBP) weakens in the European morning on Wednesday. Industrial Production and Trade Balance data for September will be featured in the European economic docket mid-week. In the American session, Producer Price Index (PPI) and Retail Sales figures for October will be watched closely by market participants.

The USD Index turned south in the American trading hours on Tuesday and lost 1.5%, posting one of its largest one-day losses of the year. The data from the US revealed that inflation in the US, as measured by the Consumer price Index (CPI), softened to 3.2% in October from 3.7% in September. In turn, Wall Street's main indexes rallied and the benchmark 10-year US Treasury fell to its lowest level in nearly two months below 4.5%. Early Wednesday, the USD Index consolidates its losses slightly above 104.00 and US stock index futures trade modestly higher on the day.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD -1.67%-1.99%-0.84%-2.22%-0.49%-2.32%-1.48%
EUR1.65% -0.31%0.82%-0.51%1.16%-0.64%0.19%
GBP1.95%0.32% 1.12%-0.23%1.46%-0.33%0.50%
CAD0.83%-0.81%-1.13% -1.36%0.34%-1.46%-0.63%
AUD2.16%0.54%0.22%1.34% 1.67%-0.11%0.72%
JPY0.49%-1.18%-1.48%-0.34%-1.71% -1.82%-0.97%
NZD2.28%0.65%0.34%1.45%0.11%1.79% 0.83%
CHF1.47%-0.17%-0.49%0.63%-0.72%0.98%-0.81% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

During the Asian trading hours on Wednesday, the data from China revealed that Retail Sales rose 7.6% on a yearly basis in October and Industrial Production grew by 4.6%. Both of these prints came in slightly better than analysts' estimates.

GBP/USD gained more than 200 pips and rose above 1.2500 for the first time since mid-September on Tuesday. In the early European session on Wednesday, the pair lost its traction and retraced a small portion of its rally after the UK's Office for National Statistics reported that the annual CPI in the UK increased 4.6% in October, down sharply from 6.7% in September.

EUR/USD broke above 1.0800 and continued to push higher toward 1.0900 on Tuesday, touching its highest level in 11 weeks in the process. Early Wednesday, the pair seems to have gone into a consolidation phase above 1.0850.

USD/JPY made a sharp downward correction amid broad-based USD weakness on Tuesday and snapped a six-day winning streak. At the time of press, USD/JPY was posting small daily gains at around 150.70. The data from Japan revealed that Industrial Production expanded by 0.5% on a monthly basis in September.

Gold benefited from falling US yields and rose nearly 1% on Tuesday. XAU/USD continues to stretch higher early Wednesday and was last seen rising 0.35% on the day at around $1,970.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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