The Latest in Forex News & Analysis.

US CPI and Jobless claims

By | September 14, 2017 12:51 pm | 0 Comments

US Core CPI YoY came out higher than expected at 1.7% vs 1.6% forecast. Core CPI MoM August 0.2%.

Initial Jobless Claims at 284k vs 300k forecast. Bad news for real earnings at -0.6% vs -0.2% forecast.

It might seems a step in the right direction towards the 2% inflation target that the FED tries to achieve. The discussion for another rate hike by year end remains open for debate.


BoE Interest Rate Decision

By | 9:16 am | 0 Comments

BoE leaves rates unchanged at 0.25%, confirming the stimulus package currently in place. The internal vote within the MPC came out as expected 7-2.

The British Pound went higher on the back of a more hawkish tone in the minutes. Officials confirmed that, under the right circumstances, it might be needed a reduction of the expansionary measures. Inflation is growing and now there is a risk of overshooting that BoE wants to avoid.



Australia Job Data

By | September 13, 2017 9:40 pm | 0 Comments

Australia August employment rose 54,000 vs 20,000 forecast and 29,000 previous month, while unemployment rate stayed unchanged at 5.6%.

AUD$ immediately higher by over 30 points from 0.7975 before the number to 0.8010 paid.

Full-time employment was the main contributor for this strong number rising 40,000 vs decrease of 20,000 in prior month.

AUD$ support now seen at around 0.7960 while 0.8050 high this week should offer decent resistance.

UK Average Earning Index

By | 12:31 pm | 0 Comments

UK average earnings Index stays stable at 2.1% confirming the previous reading even if it falls short on expectations of 2.3%.

With the unemployment rate slightly coming off (4.3% vs 4.4%), this reading shows a mixed but stable situation in the UK.

Tomorrow the BoE will announce its Interest Rate decision, but all the eyes will be on the meeting minutes.


By | September 12, 2017 10:38 am | 0 Comments

UK CPI for the month of August came out at 2.9% vs 2.8% forecast and 2.6% previous reading.

Inflation in UK is clearly rising on the back of a weaker Pound, which is still extremely far from pre-Brexit levels. Last time that inflation was so high in the UK, Interest rates were at 0.5% (July 2013).

This represents a challenge for BoE since inflation is picking up on the back of weaker currency, but wages (even if growing at 2.1%) are not able to keep up with inflation growth rate.

Tomorrow BoE will release its Average Earnings Index which at this point is a key indicator to predict the next move for BoE. A rate increase by year end is now priced with 34.7% chance compared with 24.5% we had yesterday.

Bank of Canada, What next?

By | September 8, 2017 12:51 pm | 0 Comments

Bank of Canada surprised the market by raising rates last Wednesday to 1%.

The economic scenario improved significantly in 2017 and brought the Central Bank to act accordingly. The only indicator lacking a bit behind is Inflation. As today’s reading shows, the labor condition is improving and, as many expects, should support inflation in Canada. With participation rate stable, the unemployment rate came off to 6.2% and 22.2k jobs were added in the month of August.

Another rate hike chance in October is currently price with 41.9% chance.

Fed comments and Japan Data

By | September 7, 2017 9:14 pm | 0 Comments

NY Fed president Dudley made somewhat dovish comments pushing USD lower across;

  • -Inflation has come off SHARPLY this year which is certainly a surprise
  • -Not clear if weak inflation is temporary or long lasting


Kansas City Fed president George speech was rather neutral to more optimistic in some areas bringing USD back up a bit;

  • -US under full employment
  • -Gradual hike is appropriate
  • -It is time to continue rate hikes
  • -Inflation is relatively mild
  • -Low inflation helps consumer


In the meantime Japan Q2 GDP was out slightly weaker than expected at 2.5% annualized vs 2.9% expected.

Japan July Current Account surplus was higher than expected mainly due to increasing trade balance surplus, which should weigh on $JPY,  Nikkei trading lower on weak GDP as well.

ECB IR decision and press conference

By | 10:11 am | 0 Comments

ECB leaves rates unchanged as expected at 0%.

All eyes on the press conference to understand, and eventually anticipate, the next Central Bank move that should be announced in October.

Uncertainty raised on conflicting messages from the President Draghi. On one hand GDP was revised up for the years 2017-2018-2019. On the other anyway, Inflation was revised down for the same period. One of the main causes of this is the EUR/USD exchange rate that has been strengthening for the past few months. The Central Bank anyway remains confident on inflation because of the improving scenario in the labor market across the EU.

October meeting will clarify what will be the monetary policy adopted in 2018. All options are on the table, from tapering to QE extension in 2018.

Australian Data

By | September 6, 2017 9:37 pm | 0 Comments

Australia July Retail sales came out flat  vs 0.3% fcst and 0.3% prior.

July Trade balance was surplus of A$460mio vs A$875mio fcst.

AUD$ immediately lower by 20 pips to 0.7990 while Australian stock market is pretty much unchanged.


Overall the Australian currency has been trading firmly these days despite the Central Bank’s concerns over strong OZ dollar, fundamentals in Australia is sound with strong GDP growth and recent rally in commodities including Iron Ore, the country’s biggest export.


In the meantime, $JPY traded down to 108.89 briefly on the back of a headline South Korea Prime Minister said North Korea may fire missile on September 9.

BOC Rate Announcement

By | 11:00 am | 0 Comments

BOC caught market by surprise, rising rates from 0.75% to 1%.

Before the announcement, expectations for the outcome were split 50/50, a typical situation in which, generally, central banks opt for the status quo rather than a big surprise in order to keep price stability on the affected asset classes.

USD/CAD dropped more than 2 big figures on the announcement, from 1.2406 to 1.2140. The reason of the hike was stronger than expected growth. GDP is surging at record levels, 3.7%, a number that is even more impressing if we consider that initial expectations for 2017 were set at 2%.

On the other hand anyway, Governor Poloz has to deal with a still weak inflation (around 1.2%) and subdued wage pressures. The market will be extremely keen in this Q4 in evaluating and pricing every single word from BOC as expectations for another hike in 2017 are split again at around 50%.


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