British Pound Rallies on Inflation Report, Will Jobs Data Curb or Amplify?
Here you can find all the latest breaking forex and currency news about British Pound Rallies on Inflation Report, Will Jobs Data Curb or Amplify? including currency analysis and forecasts, live foreign exchange rates, central bank interest rates, and currency trading strategies from experienced fx traders and forex platforms.
Talking Points:
- Dollar Advances on Yellen Commentary but Checked by Risk Waver
- British Pound Rallies on Inflation Report, Will Jobs Data Curb or Amplify?
- Euro Eyes 1.3500 as Equities Slide, Bond Yields Slowly Gain
Dollar Advances on Yellen Commentary but Checked by Risk Waver
Technically speaking, the US Dollar is in the middle of an impressive run. Following Fed Chairwoman’s testimony and a run of data this past session, the Dow Jones FXCM Dollar Index (ticker = USDollar) is up four consecutive trading days. That is the longest run for the benchmark currency in nearly five months. However, practically speaking, the index hasn’t covered any ground. Across its major pairings, its performance is far more inconsistent. Where the greenback has marked strong progress versus the Euro, it is little changed when paired with the Yen and is losing ground to the Pound. This is yet further evidence to the lack of conviction in the market and the need to monitor volatility measures for cues to speculative swells. As it stands, the short-term (one-week) FX volatility measure is just off a record low at 4.67 percent.
This past session, the retail sales (short of forecasts) and import inflation (slightly higher) figures were deemphasized as the market was focusing in on Fed Chair Janet Yellen’s semi-annual testimony before the Senate. Aware of her influence over capital markets and speculation, the central banker walked the line by refusing to commit to any policy paths that the FOMC hasn’t already announced in the path. She remarked that growth and labor conditions were improving, but were still short of target. As for stimulus, she repeated an October end to QE3 was likely if the economy kept pace. As for the exit strategy, it is under discussion but no decisions have been made. Perhaps the most interesting aspect of her remarks was the mention of the financial markets. Where the Fed has been agnostic to making comments on the markets in the past, they are making a concerted reference at most major events. Yellen played down bubbles, but allowed that low-rate environments led to a reach for yield. She went so far as to point out ‘stretched’ levels on junk assets and possible ‘froth’ in certain sectors…
In the upcoming session, we will have round two of Yellen’s testimony (before the House), but it is unlikely to deviate from yesterday’s remarks. The TICS capital flows and PPI figures will be a good data mix, while Fed’s Fisher and the Beige Book will add to the Chair’s influence.
British Pound Rallies on Inflation Report, Will Jobs Data Curb or Amplify?
Volume behind GBPUSD surged to the highest level in five months as the pair felt a surge in volatility. While the dollar was doing its part for ‘cable’, the British Pound was under fundamental power itself with the release of the most recent wave of inflation statistics. With the most direct path to rate speculation – the sterling’s primary fuel source – the CPI stood out. The year-over-year reading for June advanced more aggressively than expected to 1.9 percent, while the core pace moved back to the 2.0 percent target. This adds a critical dynamic to the BoE’s rate forecasts – emerging inflation pressures. That said, yields and swaps rose; but have not extended their trend 12-month trend. Perhaps another push is needed. The labor data (jobless claims, ILO unemployment, wages) due today may disarm or leverage rate speculation.
Euro Eyes 1.3500 as Equities Slide, Bond Yields Slowly Gain
Though most FX traders were focused on event risk in other corners of the market, a bullish lean for the US Dollar and British Pound would draw a notable enough contrast to the Euro’s situation to see the currency down. On the docket, the ZEW investor sentiment survey for July showed the outlook for the Eurozone dropped to its lowest level in 11 months while Germany’s own forecast hit a 19-month trough. While still high historically, the measures are sliding dangerously fast. Furthermore, we see the markets themselves are starting to shudder. European equity indexes were down once again and periphery bonds were slowly bleeding as well. As the saying goes, ‘follow the money’.
Canadian Dollar: Don’t Write Off the BoC Decision Too Quickly
Normally, I wouldn’t look to the Bank of Canada’s monetary policy meetings with any kind of expectation for volatility or fundamental presumption for trend generation. Yet, recently, the market has paid greater heed to the nuance in Governor Poloz’s remarks on the state of the economy and bearings for policy. Should the central bank further ease up on the dovish rhetoric adopted earlier in the year, the Canadian dollar may revive its run. Ultimately, a carry currency without a yield stands to lose far more if there isn’t specter of higher returns in the future.
New Zealand Dollar Tumbles Drops after CPI Comes in Weaker than Projected
Having already hiked rates three times, the RBNZ is moving ahead of the fundamentals. Policy is frequently changed in accordance with expectations, but New Zealand’s inflation figures aren’t bearing out those concerns. The 2Q CPI reading posted a weaker-than-expected 1.6 percent annual figure and sent the kiwi reeling. If this doesn’t give Wheeler pause in next week’s rate meet, it can cool subsequent pace.
Chinese Yuan, Australian Dollar Unimpressed by China 2Q GDP Beat
There was confusion in the aftermath of this morning’s Chinese data. A 2Q GDP update was the top billing to a line of data that included retail sales, fixed investment and industrial production. Overall, the data modestly beat out the consensus. Yet, this doesn’t change the general trend behind growth figures (which are softening). Furthermore, it also meets the right balance to preclude the need of further stimulus.
Gold Extends Decline as US and UK Monetary Policy Outlook Firms
While it didn’t suffer the same aching pace suffered Monday, this past session was still emblazoned in red for gold. The 0.7 percent drop from spot was accompanied by another heavy day for volume in derivatives (futures and ETFs). With the US and UK receiving mild nudges towards stimulus withdrawal, there is a motive to work with. That said, this is more likely speculative-based move than underlying fundamentals.**Bring the economic calendar to your charts with the DailyFX News App.
ECONOMIC DATA
GMT |
Currency |
Release |
Survey |
Previous |
Comments |
0:30 |
AUD |
Westpac Leading Index (MoM) (JUN) |
0.1% |
Has not seen above 0.1% in 10 months |
|
2:00 |
CNY |
Fixed Assets ex Rural (YTD) (YoY) (JUN) |
17.2% |
17.2% |
China’s key growth figures are a broad health check for the country. However, the trend should not be overlooked for the modest beat or miss that the outcomes may offer. |
2:00 |
CNY |
Retail Sales (YoY) (JUN) |
12.5% |
12.5% |
|
2:00 |
CNY |
Industrial Production (YoY) (JUN) |
9.0% |
8.8% | |
2:00 |
CNY |
Gross Domestic Product s.a. (QoQ) (2Q) |
1.8% |
1.4% | |
2:00 |
CNY |
Gross Domestic Product (YoY) (2Q) |
7.4% |
7.4% | |
8:00 |
EUR |
Italian Trade Balance (Total) (euros) (MAY) |
3505M |
Trade figures have risen, helping to offset domestic shortfalls. But Italy is still being treated as the ‘EU weak man’ |
|
8:00 |
EUR |
Italian Trade Balance EU (euros) (MAY) |
1851M |
||
8:30 |
GBP |
Jobless Claims Change (JUN) |
-27.0K |
-27.4K |
Labor figures in the UK can build on the volatility stoked with the previous sessions CPI data. If this reading shows material improvement, it may remove the restraints on interest rate forecasts. Miss, and doubt can trigger a steeper retreat. |
8:30 |
GBP |
Claimant Count Rate (JUN) |
3.1% |
3.2% |
|
8:30 |
GBP |
ILO Unemployment Rate (3M) (MAY) |
6.5% |
6.6% | |
8:30 |
GBP |
Average Weekly Earnings ex Bonus (3MoY) (MAY) |
0.8% |
0.9% | |
8:30 |
GBP |
Average Weekly Earnings inc Bonus (3MoY) (MAY) |
0.5% |
0.7% | |
9:00 |
EUR |
Euro-Zone Trade Balance s.a. (euros) (MAY) |
16.5B |
15.8B |
Consensus is for a May balance that is just short of the record set last May |
9:00 |
EUR |
Euro-Zone Trade Balance (euros) (MAY) |
16.5B |
15.7B |
|
9:00 |
CHF |
ZEW Survey (Expectations) (JUL) |
4.8 |
Sentiment has dropped 5 of last 6 reads |
|
11:00 |
USD |
MBA Mortgage Applications (JUL 11) |
1.9% |
Housing focus is growing worldwide |
|
12:30 |
USD |
Producer Price Index (YoY) (JUN) |
1.9% |
2.0% |
An upstream inflation figure, this may not have the same impact as the UK data; but it can still shape US rate forecasts |
12:30 |
USD |
Producer Price Index ex Food and Energy (YoY) (JUN) |
1.7% |
2.0% |
|
13:00 |
USD |
Net Long-term TIC Flows (MAY) |
-$24.2B |
Given the rise in the benchmark 10-year Treasury bond and late rise in the S&P 500 in May, a US inflow is likely |
|
13:00 |
USD |
Total Net TIC Flows (MAY) |
$136.8B |
||
13:15 |
USD |
Industrial Production (JUN) |
0.3% |
0.6% |
Forecast for capacity utilization – precursor to inflation – would match highest reading in 6 years |
13:15 |
USD |
Capacity Utilization (JUN) |
79.3% |
79.1% |
|
14:00 |
CAD |
Bank of Canada Interest Rate Decision |
1.00% |
1.00% |
Tone is the focus rather than any rates |
14:00 |
USD |
NAHB Housing Market Index (JUL) |
50 |
49 |
Last reading first rise in 6 months |
14:30 |
USD |
DOE U.S. Crude Oil Inventories (JUL 11) |
-2370K |
Dropped 5 of past 6 weeks |
|
23:50 |
JPY |
Japan Buying Foreign Bonds (Yen) (JUL 11) |
-¥287.1B |
The nagging question of ‘who will buy JGBs when Japan’s pension fund sells’ remains |
|
23:50 |
JPY |
Japan Buying Foreign Stocks (Yen) (JUL 11) |
¥163.8B |
||
23:50 |
JPY |
Foreign Buying Japan Stocks (Yen) (JUL 11) |
¥330.9B | ||
23:50 |
JPY |
Foreign Buying Japan Bonds (Yen) (JUL 11) |
¥301.8B |
GMT |
Currency |
Upcoming Events & Speeches |
8:30 |
EUR |
ECB's Benot Coeure Speaks on Euro Economy |
14:00 |
USD |
Fed’s Yellen Gives Semi-Annual Testimony to House Committee |
16:00 |
USD |
Fed’s Fisher Speaks on Monetary Policy in Los Angeles |
18:00 |
USD |
US Federal Reserve Releases Beige Book |
SUPPORT AND RESISTANCE LEVELS
To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal
To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table
CLASSIC SUPPORT AND RESISTANCE
EMERGING MARKETS 18:00 GMT |
SCANDIES CURRENCIES 18:00 GMT |
|||||||||
Currency |
USD/MXN |
USD/TRY |
USD/ZAR |
USD/HKD |
USD/SGD |
Currency |
USD/SEK |
USD/DKK |
USD/NOK |
|
Resist 2 |
13.5800 |
2.3800 |
12.7000 |
7.8165 |
1.3650 |
Resist 2 |
7.5800 |
5.8950 |
6.5135 |
|
Resist 1 |
13.1500 |
2.3000 |
11.8750 |
7.8075 |
1.3250 |
Resist 1 |
6.8155 |
5.8475 |
6.2660 |
|
Spot |
12.9418 |
2.1289 |
10.6645 |
7.7501 |
1.2466 |
Spot |
6.6888 |
5.4511 |
6.1665 |
|
Support 1 |
12.8350 |
2.0700 |
10.2500 |
7.7490 |
1.2000 |
Support 1 |
6.0800 |
5.3350 |
5.7450 |
|
Support 2 |
12.6000 |
1.7500 |
9.3700 |
7.7450 |
1.1800 |
Support 2 |
5.8085 |
5.2715 |
5.5655 |
INTRA-DAY PROBABILITY BANDS 18:00 GMT
\CCY |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
Gold |
Res 3 |
1.3750 |
1.7247 |
102.19 |
0.8930 |
1.0692 |
0.9524 |
0.8822 |
139.83 |
1345.75 |
Res 2 |
1.3732 |
1.7223 |
102.04 |
0.8917 |
1.0679 |
0.9508 |
0.8806 |
139.61 |
1340.98 |
Res 1 |
1.3714 |
1.7199 |
101.89 |
0.8904 |
1.0665 |
0.9492 |
0.8789 |
139.40 |
1336.21 |
Spot |
1.3679 |
1.7152 |
101.59 |
0.8878 |
1.0639 |
0.9460 |
0.8756 |
138.97 |
1326.67 |
Supp 1 |
1.3644 |
1.7105 |
101.29 |
0.8852 |
1.0613 |
0.9428 |
0.8723 |
138.54 |
1317.13 |
Supp 2 |
1.3626 |
1.7081 |
101.14 |
0.8839 |
1.0599 |
0.9412 |
0.8706 |
138.33 |
1312.36 |
Supp 3 |
1.3608 |
1.7057 |
100.99 |
0.8826 |
1.0586 |
0.9396 |
0.8690 |
138.11 |
1307.59 |
v
--- Written by: John Kicklighter, Chief Strategist for DailyFX.com
To contact John, email [email protected]. Follow me on twitter at http://www.twitter.com/JohnKicklighter
Sign up for John’s email distribution list, here.
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. Forex Capital Markets, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. Forex Capital Markets, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Forex Capital Markets, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.
original source
The article above is about breaking forex and currency news regarding British Pound Rallies on Inflation Report, Will Jobs Data Curb or Amplify?, if you have any question about it. Please contact us by using the link below. Thanks for your patience.
- Japanese Yen Gains, Nikkei Falls as BOJ Leaves Policy Unchanged
- Chinese Business Sentiment Contracts for the First Time in 4 Months
- Dismal UK Retail Sales to Spur Another Test of GBP/USD Resilience
- Forex-Webinar:-FOMC-Minutes-Reinforce-Hike-Forecast
- Trading Video: Dollar Fails to Rally on Hawkish FOMC, Equities Rally
- Among Top Themes, Where is the Risk Most Potent: Fed Hike, China, EM?
- EUR/USD Technical Analysis: Looking to Short on Bounce
- US Dollar Declines as FOMC Minutes Bring Nothing New to the Table
- US DOLLAR Technical Analysis: USD Holds Support on FOMC Minutes
- WTI Crude Oil Price Forecast: What Now That $40bbl Broke?
- Fingertrp Scalping with James Stanley (Using Tradingview Charts)
- EUR/USD Risks Fresh Monthly Lows on Hawkish FOMC Minutes
- Analyst Pick - Kiwi & CAD in Focus
- Price & Time: USD/CAD ? It?s Showtime
- GBP/USD Ranges Ahead of FOMC Minutes
- President Xi Warns That China Faces Considerable Downward Pressure
- FOMC Minutes Later Today - USD Set for October 28 Redux
- Silver Price Is Targeting Its Yearly Low
- FTSE 100: Commodity Markets Wants to See The FTSE 100 at 6040
- DAX 30: Momentum Slows Down, FOMC Minutes on Tap
- US Dollar May Extend Gains as Fed Minutes Foreshadow Rate Hike
- Copper Surplus Faces Falling Premiums; Gold Slides before Fed Minutes
- China Real Estate Market Recovery Slows in October
- Traders Not as Confident of Fed Hike as Markets, Economists
- EUR/GBP Technical Analysis: Euro Drops to 3-Month Low
- Dollar Unmoved After China Treasury Holdings Hit a 7 Month Low
- Can Dollar Climb Continue After FOMC Forecast Shift?
- Dollar’s CPI Rally Lacking, Stall in Risk Raises Yen Crosses Appeal
- NZD/USD Technical Analysis: Short Trade Activated Sub-0.65
- Will the DAX Crack or Cower from Resistance?