EUR/USD, GBP/USD and USD/JPY await US CPI data release
Outlook on EUR/USD, GBP/USD and USD/JPY ahead of US inflation data while the Japanese Yen is trading in new 24-year lows.
EUR/USD consolidates around 97 cents ahead of US CPI data
EUR/USD has been consolidating in a tight, low volatility range around the 97 cents mark all of this week while awaiting US consumer price index (CPI) data out later today. Month-on-month CPI for September is expected to come in at 0.1% versus 0.2% in August and Core CPI – excluding food and energy – at 0.6% versus 0.4% previously. Year-on-year the data is anticipated to show 8.3% versus 8.1% in August.
Higher than expected inflation will probably be interpreted by the market as meaning that the Federal Reserve (Fed) will stick to its aggressive tightening path with the US dollar continuing its ascent and EUR/USD slipping back towards its $0.9536 September 20-year low.
Lower than expected CPI, especially if the data comes in much lower than forecast, would most likely lead to a short-term decline in the greenback and give the euro a boost, pushing the exchange rate back towards the $0.9865 to $0.9946 August-to-mid-September lows. Key resistance remains to be seen between the 55-day simple moving average (SMA), the February-to-October downtrend line, early-October high between $0.998 and parity.
GBP/USD stabilises ahead of US CPI data release
GBP/USD reached this week’s low at $1.0924 after five consecutive days of declines amid UK gilt yields surging towards their late-September post mini-budget peak after the Bank of England (BoE) governor said on Wednesday that pension funds had until Friday to fix their liquidity problems.
Despite UK industrial production falling by 1.8% month-on-month and 5.2% year-on-year in August, well below expectations of a 0.1% monthly contraction and a 0.6% annual expansion, GBP/USD managed to stabilise and even regain some of its recent losses. All eyes are on Thursday’s US CPI data, especially after Wednesday’s hotter-than-expected US producer price inflation data.
A higher-than-expected CPI reading would likely lead to renewed US dollar strength, pushing GBP/USD back to Wednesday’s low at $1.0924, a slip through which would engage the 27 September high at $1.0838 and the $1.08 region. If a significantly lower reading of the CPI data were to be seen, Tuesday’s high at $1.1180 would be expected to be taken out with the August-to-October downtrend line at $1.1378 being targeted.
USD/JPY trades in 24-year lows ahead of US CPI data
USD/JPY continues to surge higher and trades in 24-year highs whilst approaching the August 1998 high at ¥147.64 ahead of US CPI data and as the Bank of Japan (BoJ) sticks to its dovish stance.
Its governor, Haruhiko Kuroda, vowed to keep ultra-easy monetary policy to support Japan’s economic recovery and stressed the need to achieve the 2% inflation target in a sustainable and stable manner, thus pushing the Japanese Yen to a new multi-decade low.
A rise above the 1998 peak at ¥147.64 would put the June 1989 high at ¥150.33 on the map. Slips should find support between the monetary intervention September highs at ¥145.90 to ¥144.99 as well as along the August-to-October uptrend line at ¥144.62.
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