The US dollar surged when headline and core inflation data beat expectations. US August CPI rose 1.9% y/y (forecast 1.8%), and CPI-ex-food and energy rose 1.7% (forecast 1.6%, July 1.7%, y/y) US Initial Jobless Claims were 284,000. The data is skewed by Hurricane Harvey.
USDCAD spiked to 1.2237 from 1.2184, while EURUSD dropped to 1.1838 from 1.1902. Neither move lasted. USDCAD is back under 1.2200 and EURUSD is at 1.1885 ( 1245 GMT)
The Bank of England left rates unchanged, as expected. What wasn’t expected, was the hawkish guidance. The BoE warned that some stimulus would need to be removed soon. Sterling soared, rising from 1.3155 to 1.3367, where it is currently trading.
Overnight, FX markets were a tad choppy but in the end, the US dollar didn’t stray very far from the closing levels.
Australia gained 54,000 jobs in August, far surpassing the 15,000 forecast. The unemployment rate was unchanged at 5.6%, but the participation rate ticked higher. AUDUSD jumped to 0.8015 from 0.7975.
Weaker than expected China Industrial Production (Actual 6.0% vs forecast 6.6%), Retail Sales (Actual 10.1% vs forecast 10.5%) and Urban Investment data (Actual 7.8% vs forecast 8.2%), capped the post AUDUSD rally.
The weak China data undermined NZDUSD as did election polls A One-News Colmar Brunton poll showed Labour in the lead at 44% and National at 40%. The election is September 23
USDJPY traded in a 110.36-72 range. Traders ignored a comment from North Korea threatening to nuke Japan.
In Europe, the Swiss National Bank policy meeting got a bit of attention. They left interest rates unchanged, as expected but complained about the overvalued Swiss franc. USDCHF bounced in a 0.9619-0.9686 range around the meeting and then settled in at 0.9665.
EURUSD was steady in Asia. It drifted higher in Europe due to more ECB official’s nattering about the need to taper. However, comments from other officials in the past few day’s suggest the timing of the tapering decision is far from a done deal. EURUSD traded in a 1.1866-1.1908 range.
Oil prices extended this weeks rally are currently trading at $49.84/barrel. Yesterday’s International Energy Agency’s comment that “global over-supply is shrinking” has underpinned prices.
The Canadian dollar was largely ignored. USDCAD traded in a narrow 1.2162-86 range with direction dictated by broad US dollar moves.
USDCAD Technical outlook:
USDCAD is in a minor uptrend inside the 1.2060-1.2250 consolidation band while prices are above 1.2110. A break of 1.2190 will lead to 1.2250. A break of 1.2250 could extend gains to 1.2410. A move below 1.2110 will target 1.2060 and then 1.2000. for today, USDCAD support is at 1.2160 and 1.2120. Resistance is at 1.2190 and 1.2240.
Today’s Range 1.2140-1.2240
Chart: USDCAD hourly