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Enough Rate Speculation to Translate CPI, FOMC Minutes to USD Moves?

Enough Rate Speculation to Translate CPI, FOMC Minutes to USD Moves?

John Kicklighter, Chief Strategist

Talking Points:

• Core UK CPI offered its most hawkish surprise in three years and drove the Pound higher

• Ahead, the combination of US CPI and the FOMC minutes may rouse the same jolt of volatility for the Dollar

• Considerable fundamental friction is needed to drive USD, motivating risk staples like SPX far more difficult

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It is high profile event risk versus a seasonal trading lull. Whichever side overpowers the other will dictate the Dollar's next move. The Dow Jones FXCM Dollar Index is still mired in a broad range that is well reflected across the majors. This indecision and restraint reflects the mood in the broader markets with expectations of depressed liquidity keeping speculative drives under wraps. It would take a substantial fundamental shove to override what is baseline market conditions. The upcoming US CPI inflation reading and FOMC minutes can achieve that kind of influence with the correct outcome, but such an extreme is unlikely. Meanwhile, the range of Pound pairs that were so close to break (GBPUSD, GBPJPY and GBPNZD amongst others) couldn't translate a surprise UK inflation reading into motivation for lasting trend. We review a market that is at odds between liquidity and event risk in today's Trading Video.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.