July 12, 2018
Pulse of the Market
· The Labor Department said its producer price index for final demand increased 0.3% last month
· The Euro fell which followed a report that ECB members were split over when to raise rates
· Both safe-haven currencies yen and Swiss franc were under pressure against the greenback
· Bank of Canada raised interest rates and said it expected GDP to come in at 2.8% for the year
|The U.S Dollar rose yesterday as data showing U.S. wholesale prices increased at a faster pace than anticipated last month raised investor expectations for stronger inflation, increasing the prospect of further Fed rate hikes. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.36% to 94.19. The Labor Department said on Wednesday its producer price index for final demand increased 0.3% last month. In the 12 months through June, the PPI rose 3.4% after rising 3.1% in May. This was the biggest annual increase in 6-1/2 years, stoking expectations the Fed could adopt a more aggressive stance on monetary policy tightening to rein in inflation. Euro weakness also pushed the greenback higher, as the single currency pared gains which followed report ECB members were split over when to raise rates. Some policymakers said an increase was possible as early as July 2019, while others suggested a move was unlikely until autumn next year, Reuters reported Wednesday, citing sources. The return of U.S.-China trade war jitters, meanwhile, did little to lift safe-haven currencies as both the yen and Swiss franc were under pressure against the greenback. The White House issued a list late Tuesday of 10% tariffs on $200 billion worth of Chinese imports it will assess. USD/CAD rose 0.26% to C$1.3148 after Bank of Canada raised interest rates Wednesday, and said it expected GDP to come in at 2.8% for the year. But analysts said the 2.8% year-end GDP target was somewhat optimistic and suggested that the loonie would continue to weaken. As things stand today, the 2.8% predicted growth for 2018 Q2 looks a touch optimistic, we remain biased for USD/CAD to re-test its 2018 highs in the coming weeks and months. The Canadian dollar whipsawed after the Bank of Canada increased interest rates as expected. After its initial 0.8 percent rally, the loonie swooned more than 1.1 percent when policymakers said U.S. tariffs would have a bigger effect on the economy than originally anticipated.|
|01:00||Australia Consumer Inflation Expectation (JUL)||Medium||4.2%|
|06:00||German Consumer Price Index (YoY) (JUN)||Medium||2.1%||2.1%|
|08:30||Bank of England Credit Conditions & Bank Liabilities Surveys||High|
|09:00||Euro-Zone Industrial Production w.d.a. (YoY) (MAY)||Medium||2.3%||1.7%|
|12:30||Canada New Housing Price Index (YoY) (MAY)||Medium||1.0%||1.6%|
|12:30||U.S Initial Jobless Claims (JUL 07)||Medium||225k||231k|
|12:30||U.S Continuing Claims (JUN 30)||Medium||1739k|
|12:30||U.S Consumer Price Index (YoY) (JUN)||High||2.9%||2.8%|
|12:30||U.S Consumer Price Index Ex Food and Energy (YoY) (JUN)||High||2.3%||2.2%|
|12:30||U.S Real Avg Weekly Earnings (YoY) (JUN)||Medium||0.3%|
|12:30||U.S Real Avg Hourly Earnings (YoY) (JUN)||Medium||0.0%|
|18:00||U.S Monthly Budget Statement (JUN)||Medium||-$80.0b||-$146.8b|
|22:30||New Zealand BusinessNZ Manufacturing PMI (JUN)||Medium||54.5|
The single currency fell as the U.S Dollar strengthened in yesterday’s trading session after the market put aside trade tension fears and focused on the Labor Department’s expectation-beating inflation report, which increased prospects that the Federal Reserve will raise interest rates another two times this year. Overall, the EUR/USD traded with a low of 1.1664 and a high of 1.1756 before closing the day around 1.1671 in the New York session.
The Japanese Yen pair broke through the psychologically significant barrier of 112 yen for the first time since Jan. 10, rising as much as 1.3 percent to a top of 112.17 yen. Wednesday’s strong flows into the dollar/yen trade continued a trend that began after the United States last week reported decent employment data and a pickup in wages. Overall, the USD/JPY traded with a low of 110.74 and a high of 112.15 before closing the day around 112.00 in the U.S session.
The British Pound faced a tough after ministers from British Prime minister Theresa May’s cabinet suddenly quit their posts, which has raised speculation that a leadership challenge could come as early as this week. The political instability has also cast into doubt the bank of England’s ability to lift interest rates next month. Overall, the GBP/USD traded with a low of 1.3197 and a high of 1.3283 before closing the day at 1.3202 in the New York session.
The Canadian Dollar weakened to a more than one-week low against its U.S counterpart in yesterday’s trading session as broad-based gains for the greenback offset an interest rate hike and the prospect of further tightening by the Bank of Canada. The U.S dollar rose as the market put aside trade tension fears and focused on an expectation-beating inflation report. Overall, USD/CAD traded with a low of 1.3062 and a high of 1.3212 before closing the day at 1.3208 in the New York session.
The Australian Dollar was unable to capitalize on improving local consumer sentiment data, weighed down by a resumption in trade war headlines. In July, Westpac Consumer Confidence rose 3.9% m/m which was the fastest increase since May 2016. Meanwhile, the index clocked in at 106.1 from 102.1 in June. That was the highest outcome since November 2013. Overall, AUD/USD traded with a low of 0.7363 and a high of 0.7445 before closing the day at 0.7364 in the New York session.
EUR/JPY is trading above 14 and below 50, 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 63 and lies above the neutral zone. In general, the pair has gained 0.29%.
Currently, GBP/JPY is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 61 reading and lies above the neutral zone. On the whole, the pair has gained 0.38%.
Currently, the cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 53 reading and lies above the neutral region. In general, the pair has lost 0.33%.
This cross is currently trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 54 and lies above the neutral region. On the whole, the pair has lost 0.07%.
This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 47 and lies below the neutral region. In general, the pair has lost 0.13%.
|FOREX Closing Prices for July 11, 2018|
|Daily Pivot Points|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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