US Inflation Undershoots Forecasts
The US Dollar has turned lower through the back end of the week following a softer-than-forecast set of US inflation figures yesterday. Headline annualised CPI was seen at 2.4% last month, an increase from the prior month’s 2.3% level but below the 2.5% the market was looking for. The monthly readings also came in below forecast with core CPI falling to 0.1% from 0.2% prior, below the 0.3% the market was looking for. Headline was also lower at 0.1% from 0.2% prior and expected. Overall, the data was seen on the weak side, keeping focus on near-term Fed easing expectations, fuelling a fresh unwinding of USD. Market pricing for a cut in September has now risen above the 70% level from around 55% prior to the data.
US Trade Talks
Away from the data, traders are also monitoring incoming news flow around US trade. Trump noted yesterday that this week the commerce department will be sending out ‘take it or leave it’ deals to the 20 countries currently involved in trade negotiations with the US. As such, there is huge USD risk in the short term. If deals are accepted and tariffs are reversed, this will be firmly positive for risk and should see USD trading sharply higher. However, if these proposals fail and tariffs are stepped up on July 9th, this will be a seismic blow to risk appetite, and USD risks a steep drop lower.
Technical Views
DXY
The failure in DXY at the 99.15 level has seen the index turning back down towards the 98.03 level. With momentum studies bearish and price still within the bear channel, focus is on a fresh push lower with 94.85 the longer-run bear target to note. Bulls need to get back above the 100 mark to alleviate near-term downside risks.
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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.