Can U.S. Data Deliver For USD?

Market Drivers October 12, 2017

  • Carry trades rally
  • EZ Industrial Production improves
  • 0.35% 0.01%
  • $51/bbl
  • $1294/oz.

Europe And Asia
AUD Home Loans 1.0% vs. 0.5%
EUR EZ IP 1.4% vs. 0.5%

North America
USD PPI 8:30
USD Jobless Claims 8:30
EUR Draghi 10:30

It’s been another quiet night in FX market today with most of the majors contained to 30-pip ranges. The one exception was the high-yielder commodity dollars, which saw a steady rise in Asian and early European trade in the wake of yesterday’s .

Although the FOMC minutes essentially reaffirmed that the Fed was on the path to in December, they also showed that there was a wide range of opinions among the members with many still concerned about the lack of inflation in US economy. The net takeaway for the FX market was that the overall tightening path of US policy is likely to be much less aggressive, especially if as some members argued, disinflation is a secular rather than a cyclical phenomenon.

The shift in sentiment helped spur some buying of high yielders as both Aussie and rose in Asian trade with the former popping all the way to .7836 before finding some resistance. The was also helped by better home loan data and higher readings on inflation expectations.

Nevertheless, the rise in comm dollars remains a short covering rally within a broader downtrend and if today’s US proves hotter than forecast, they may give up some of their overnight gains as US yields are likely to improve.

The price action in North America is likely to remain subdued as trader look to tomorrow’s and data, which should provide a much better gauge of both inflation and growth potential in the US economy and could revive the rally if both reports beat their mark. The possible event risk on the docket is Mario ’s participation on a panel in Washington D.C. about Macro policy issues. If Mr. Draghi makes any offhand remarks about QE taper, the could quickly pop to 1.1900 as a result.

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