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15 September 2017- Dean Forex Market Commentary

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Dean's Daily FX Update – 15 September 2017

In the Zone

  • EURUSD
  • GBPUSD
  • AUDUSD
  • Oil

Noteworthy News

  • There has to be some reaction from the rest of the world on the latest North Korean missile test. It seems that NK are “poking a dog with a stick,” and it cannot be long before there is serious consequences – which would reverberate around the world.

Recap

Since hurricane Harvey made landfall on the US, it became expected that the Fed would be forced to leave rates on hold for the rest of the year. Yesterday we saw a red hot CPI number out of the US and we saw lay bare the fickle nature of the market, as it started seeing a little doubt creep into the market and some hope for another hike after all. If you delve into the numbers a little more, you can see that there were huge increases in hotel costs which would lead me to think these could be once off factors.

Late last night we had risk events in the form of North Korea firing a missile over Japan into the Pacific, although I think the bigger surprise came from the Treasury Secretary Mnuchin. He wasted no time in reiterating that they were trying to stoke economic growth but it became apparent that the White House have much respect for the Fed – which would indicate that Chair Yellen may be replaced soon. He also suggested that he does not care about inflation which in an indication that the White House would prefer for interest rates to stay on hold. This was a strange end to what was shaping to be a good week for the White House.

The USDGBP was clearly the top dog yesterday, the catalyst was a clear hawkish shift from the Bank of England. The pair started the day around 1.3200 and the steady bid moved the pair all the way to 1.3410 – that’s over 200 pips in a day. I am keeping an eye on this pair as this is where a lot of sellers may look to build some offers and so I will be looking for shorting opportunities later on this morning.

The USDCAD is the other interesting pair to watch as it continues to trade in a resilient fashion. A big driver for the CAD has been the recovery in the oil prices and also the fact that the central bank continues to punt further interest rate hike. The question for the USDCAD will be whether it can continue its hawkish stance, I will be keeping an eye on oil this morning as any dip would force the USDCAD to trade higher.

All eyes this morning will be on the US response to North Korea and this will put safe haven assets like gold and the JPY on red alert. I am sitting out both of these instruments until the reaction of the White House is clear.

Keep an eye out for the afternoon video that tries to tie everything together.

Important Economic Data out today

 

14:30                                     USD                                       Core Retail Sales

Consensus:                         0.5%

Effect:                                   Actual higher than expected is good for the USD

 

14:30                                     USD                                       Empire State Manufacturing Index

Consensus:                         18.2

Effect:                                   Actual higher than expected is good for the USD

 

15:15                                     USD                                       Industrial Production

Consensus:                         0.1%

Effect:                                   Actual higher than expected is good for the USD

 

16:00                                     USD                                       Prelim UoM Consumer Sentiment

Consensus:                         95.1

Effect:                                   Actual higher than expected is good for the USD

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