11 Apr 2014
The day of consolidation and inflation
FXStreet (Moscow) - Friday is the day of Inflation data, and although the morning releases haven’t triggered much volatility yet, it did highlight current developments all over the world.
Chinese CPI came out below expectations at 2.4% vs 2.5% forecast, reminding the market of the slowing growth pace. German CPI stayed unchanged at 0.9%, although yesterday, France, Greece, and the Netherlands had weaker than expected levels. The majors are consolidating within narrow ranges being unable to break the nearest technical levels, with some mild profit-taking before the weekend is going on already.
While GBP/USD and USD/JPY switched to corrective mode, EUR/USD is still trading around 3-week highs, although barren economic calendar of Europe limits any further moves.
Commodity currencies retreated from multi-month highs, though, staying not far away so far. The pairs with Swissy have been of interest recently, as the risk aversion, and USD weakness makes CHF one of the most attractive instruments to trade on.
Don’t underestimate US PPI
Since the inflation data is on the agenda today, it is no wonder that US PPI data will be in focus during American session.
We haven’t seen much interest to price pressure developments for a long time, since the CPI index fell far below the 2%-target level in the most developed countries. Nevertheless, the impressive injections of liquidity within the quantitative easing programs all over the world will do its job, and trigger the inflation again. It’s just a matter of time.
In many countries – United Kingdom, Switzerland, Australia, the USA – the housing market shows the first signs of the bubbles developing, thus we don’t rule out the spill-over effect will bring the price pressure to higher levels.
Thus, even the second-tier data like US PPI numbers may be of interest in current circumstances. Any signs of growing price pressure will trigger the renewed demand on the USD.
Yesterday, we saw better than expected Import Prices showing the 0.6% m/m vs the forecasted +0.2% m/m, and although it doesn’t have direct influence on the PPI and CPI readings, the 4th month of the rising numbers is a trend, and it is USD-bullish trend. In order to see the spark of interest to the American currency, we need to get the release above the expected +0.1% m/m, 1.2% y/y this time.
Chinese CPI came out below expectations at 2.4% vs 2.5% forecast, reminding the market of the slowing growth pace. German CPI stayed unchanged at 0.9%, although yesterday, France, Greece, and the Netherlands had weaker than expected levels. The majors are consolidating within narrow ranges being unable to break the nearest technical levels, with some mild profit-taking before the weekend is going on already.
While GBP/USD and USD/JPY switched to corrective mode, EUR/USD is still trading around 3-week highs, although barren economic calendar of Europe limits any further moves.
Commodity currencies retreated from multi-month highs, though, staying not far away so far. The pairs with Swissy have been of interest recently, as the risk aversion, and USD weakness makes CHF one of the most attractive instruments to trade on.
Don’t underestimate US PPI
Since the inflation data is on the agenda today, it is no wonder that US PPI data will be in focus during American session.
We haven’t seen much interest to price pressure developments for a long time, since the CPI index fell far below the 2%-target level in the most developed countries. Nevertheless, the impressive injections of liquidity within the quantitative easing programs all over the world will do its job, and trigger the inflation again. It’s just a matter of time.
In many countries – United Kingdom, Switzerland, Australia, the USA – the housing market shows the first signs of the bubbles developing, thus we don’t rule out the spill-over effect will bring the price pressure to higher levels.
Thus, even the second-tier data like US PPI numbers may be of interest in current circumstances. Any signs of growing price pressure will trigger the renewed demand on the USD.
Yesterday, we saw better than expected Import Prices showing the 0.6% m/m vs the forecasted +0.2% m/m, and although it doesn’t have direct influence on the PPI and CPI readings, the 4th month of the rising numbers is a trend, and it is USD-bullish trend. In order to see the spark of interest to the American currency, we need to get the release above the expected +0.1% m/m, 1.2% y/y this time.