TALKING POINTS – US DOLLAR, CPI, FED, EURO, POUND, BREXIT, YEN
- US Dollar may be back on offense following CPI inflation figures
- Euro, Pound rise on Brexit deal hopes but follow-through suspect
- Yen poised to extend gains as Aussie and NZ Dollars suffer anew
The US Dollar traded broadly lower in Asia Pacific trade. The Euro and British Pound extended yesterday’s advance as regional investors took their turn to react to firming hopes for an imminent Brexit deal. The anti-risk Japanese Yen remained well-supported as APAC bourses sank, picking up on a dismal lead from Wall Street. Meanwhile, commodity bloc currencies cautiously retraced earlier losses.
US DOLLAR MAY BE BACK ON OFFENSE AFTER CPI DATA
European bourses are poised to pick up the risk-off baton. Futures tracking the FTSE 100 stock index are pointing sharply lower ahead of the opening bell in London and the economic calendar offers relatively little that is likely to redirect investors’ attention elsewhere.
The Yen as well as the Swiss Franc – a frequent beneficiary of regional haven demand – appear well-positioned to benefit. The Greenback may remain on the defensive in the first part of the session but its fortunes might reverse after September’s US CPI data comes across the wires.
The core inflation rate is expected to rise to 2.3 percent on year. Anything short of an improbably dramatic downside surprise stands to reiterate a Fed rate hike outlook that the markets have already judged worryingly hawkish. In fact, leading PMI data hints further steepening may yet follow an upside surprise.
The US unit’s fortunes may be revived against this backdrop. Continued risk aversion might sustain weakness against the Yen, but also revive gains versus the Aussie and Kiwi Dollars. Meanwhile, losses against European FX are unlikely to be lasting as the Brexit narrative idles (at least for now).
See our forecasts for currencies, commodities and equities to learn what will drive prices in Q4!
ASIA PACIFIC TRADING SESSION
EUROPEAN TRADING SESSION
** All times listed in GMT. See the full economic calendar here.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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