- The Us dollar was knocked back a step or two.
- FX space in lockdown as all eyes turn to US CPI.
The greenback was somewhat weaker on Tuesday as positions were pared back, likely to do with the major risk event in the US CPI coming up later today, but also possible down to President Trump who has been complaining that the dollar is unjustly higher than what he sees to be as competitor nation's currencies, such as the euro and others. Trump tweeted saying that the euro “and other currencies are devalued against the dollar,” holding the Fe to blame again, arguing that the U.S. rates are “way too high”.
Elsewhere, sterling was a stand out performer amongst an otherwise sleepy FX space. While the headline unemployment remained at 3.8%, overall, the UK's April/May employment report was solid, beating the market's expectations and despite the Brexit angst. The detail held a surprise improvement in both employment (+32k, est. +4k) and average wages (+3.4% 3m/y, est. +3.2%). However, more importantly, especially in an environment where major central banks are moving towards a more accommodative approach to monetary policy, the MPC members are all lining up the ducks in a row with a hawkish bias. Overnight, both Saunders and Broadbent added to comments from fellow MPC member Haldane comments arguing that rates would be higher under a smooth Brexit.
As for U.S. data, headline producer prices came in as expected for May, at 0.1% m/m, down from 0.2% in April. "Similarly, the core measure met expectations, rising by 0.2% m/m in May. On a yearly basis, the headline PPI figure missed expectations; coming in at 1.8% y/y (from 2.2% in April) but the yearly core figure came in as expected, at 2.3% y/y (from 2.4% in April). Producer prices excluding food, energy and trade services rose 0.4% in May (unchanged from the month prior) whilst rising 2.3% y/y (from 2.2% in April)."
Analysts at Westpac note the Fx space price action and key events ahead further down:
- EUR/USD rose from 1.1310 to 1.1337.
- GBP/USD bounced off 1.2670 late Sydney to 1.2730.
- USD/JPY initially rose to 108.80 but then fell to 108.50.
- AUD/USD continued its quiet trade, only a 20 pip range over 24 hours, hovering around 0.6960. Underperformer NZD extended yesterday’s decline to 0.6569 before steadying around 0.6585.
- AUD/NZD rose steadily, up 40 pips on the day to 1.0580.
Key notes from Wall Street:
Wall Street's bullish streak gets capped, DJIA rested at R1
Key events ahead:
The June Westpac-Melbourne Institute Australia consumer sentiment survey is due at 10:30am Syd/8:30am Sing/HK.
May consumer and producer prices (11:30am Syd/9:30am local). The median forecast is 2.7%yr on CPI and 0.6%yr on PPI.
The US data focus is May CPI.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds below 1.0750 ahead of key US data
EUR/USD trades in a tight range below 1.0750 in the European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays firm above 156.00 after BoJ Governor Ueda's comments
USD/JPY stays firm above 156.00 after surging above this level on the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.