Review of trades. Dollar falls – all hope for CPI

The dollar began a dull decline Friday. The data on inflation and retail sales published in the US today is his last hope to recoup this week, but they are also unlikely to be able to take him to the green zone. Over the past five days, the dollar index has lost 0.9%, going down to the level of 92.97, and all because the first impression of Trump’s tax reform, as always, was deceptive, and the excessive mystery surrounding the candidate for the head of the Federal Reserve, coupled with unconvincing makrostatistikoy finally disappointed the bulls USD.

The yen is growing despite interest in risk

The yen has emerged as the leader in the morning, gaining 0.3% against the dollar. The dynamics is due to the traditional factor – a decrease in yield on the state. bonds of the USA. Interest in risky assets usually limits the upside potential of the yen, but this time even the growth of the Nikkei to its maximum levels over the past twenty-odd years could not stop the currency’s strengthening. Now the dollar / yen is trying to overcome key support in the area of ​​112.00. The current intraday low is fixed at 111.87. From a technical point of view, the pair may well descend to 111.50 today if the bearish sentiment towards the US currency persists in the US session. Meanwhile, the US inflation report, published today, is able to support the dollar and to drop USD / JPY back to 112.00 or higher if the data comes out at or better than forecasts. Recall that it is the risks of sluggish inflation that make some officials from the Federal Committee on Open Markets still question the expediency of the December rate hike. Yesterday’s report on the producer price index (PPI) showed an increase in price pressure in September, but there is no certainty that the CPI will reflect a similar dynamics. In addition, the indicators for September may be distorted by the consequences of the hurricanes that hit the US in late August.

Pound again shows the wonders of volatility

Pound yesterday was pretty stormy: the intraday range paired with the dollar exceeded 160 points. In a precipitous fall, Michel Barnier, the EU negotiator for Brexit, is to blame, who stated that the process had reached a deadlock. However, towards the middle of the trading session in New York, the attitude towards the pound has changed dramatically. and it soared to 1.3280. The exact reason for the reversal is still unclear. Perhaps the article in the German edition Handelsblatt, that Britain can provide a two-year transition period, inspired traders such optimism. The report on credit conditions in the UK published yesterday showed that banks tighten conditions on unsecured loans, while this trend will continue in the next three months. Loans for consumers will become less affordable. On the one hand, it will help to reduce the high debt burden in the consumer segment, but on the other hand it will actually weaken inflationary pressure and limit economic activity as a whole. Today, the pound / dollar is testing the resistance at 1.3300 (the current high is 1.3311), but whether it will be able to stay longer at the end of the day depends on how the market reacts to inflation data and retail sales in the US.

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