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Dean's Daily FX Update – 13 October 2017
In the Zone
- GBPUSD
- AUDUSD
- NZDUSD
- USDCAD
Noteworthy News
- I will be waiting for the reaction of the London session this morning of Trumps latest executive order, there could be some early morning volatility.
Recap
Considering the event risk we had yesterday with both the ECB and the talking heads from the FOMC talking, the day was rather range bound. The market continues to be dominated by fundamental and economic issues rather than pure technical levels. The circus that is fast becoming the White House Administration continues to create volatility in the market, President Trump has to be one of the most confusing leaders in history. He often contradicts himself and tweets comments that don’t sound factual, but no one could have anticipated the executive order last night that effectively ended the subsidies that insurers would get from the government. This is clearly a calculated move that does no good for the American people, if I have to be blunt – this is the act of a very childish person who does not have the emotional IQ to lead a country.
On the economic front, the greenback would have been buoyed by the PPI data yesterday, it only traded up by a handful of pips yesterday but the PPI is often a precursor to the CPI reading. For a Fed that has always reiterated that inflation is transitory this would be a good sign and would thus strengthen their position that we could get one more rate hike this year.
The EURUSD was relatively strong yesterday considering movements in the other pairs, Draghi did not give us much but he did reiterate that interest rates would remain on hold for an extended time. This predictably weakened the EUR, but I find it interesting that the EUR found support at 1.1820. The sellers will want to see 1.1820 broken before we get any momentum behind the move but we will see how the market reacts to Trumps bombshell on the London open this morning.
Cable started the day in disastrous fashion as the pair dropped like a lead balloon from 1.3270 to 1.3120 as wave after wave of selling entered the market. Just as seemed that this would be a day for the history books, the EU offered the UK an olive branch that immediately led to a massive bounce in the GBPUSD – sterling is actually trading higher now than yesterday morning. The market moving headline was that the EU would offer a two-year transition period to the UK, this is the first concession we have seen – is this dog fight about to become friendly? I will be looking at 1.3300 with some interest and I suspect that traders may start to fade this move.
Important Economic Data out today
14:30 USD CPI
Consensus: 0.6%
Effect: Actual higher than expected is good for the USD
14:30 USD Retail Sales
Consensus: 1.7%
Effect: Actual higher than expected is good for the USD
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