US CPI Due
The US Dollar is on watch today as traders brace for the latest set of US inflation readings. The market is looking for headline annualised CPI to have risen to 2.5% from 2.3% last month while monthly readings are expected flat on headline and lower on core. If an increase in the YoY reading is seen this should keep USD underpinned near-term, creating some pushback against near-term Fed easing expectations.
Fed Easing Expectations
The market is currently pricing in a September cut though this pricing is subject to a shift, particularly if we see an upside surprise today. On the other hand, if data undershoots forecasts today, this should see dovish pricing creeping higher with a September cut looking more likely and pricing for an earlier August cut likely to lift, putting pressure on USD.
US/China Trade Talks
The Dollar has so far shown little reaction to the outcome of two days of US-Sino trade discussions in London. Negotiations resulted in a framework being agreed to re-start the bilateral flow of sensitive goods, once signed off by Trump and Xi. This is clearly a positive sign though sceptics argue that a trade deal is still a way off especially with China refusing to reduce its trade deficit with the US. As such, it will likely take more concrete signs of progress to help fully revive trade optimism and lift USD.
Technical Views
DXY
For now, DXY continues to hold around the 99.15 level, within the bull channel and recently formed triangle pattern. Given the bear trend, focus is on an eventual break lower with 94.85 the deeper bear-target. If we do break higher, however, 100.38 will be first target with 103.40 the longer-run objective for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.