US CPIs in Focus Amid Fed Cut Bets, GBP Gains After Jobs Data

Risk Appetite Eases, Investors Lock Gaze on US CPIs

The dollar traded mixed against the other G10 currencies on Tuesday and during the Asian morning Wednesday. It gained against NZD, SEK, CAD, CHF and AUD in that order, while it underperformed versus GBP, NOK, EUR and JPY.

USD/CAD — Technical Outlook

After breaking its long-term upwards moving trendline drawn from the low of February 1 stof 2018, USD/CAD drifted lower. The pair does occasionally show a few outbursts to the upside, but all of them are still maintained below the 1.3309 zone. Even though we might see a small push higher, as long as the rate remains below the above-mentioned long-term trendline, we will class any move higher as a temporary correction and stay bearish for a while more.

GBP Gains on UK Jobs Data, AU’s Employment Report Takes Turn

The pound was yesterday’s main gainer, coming under buying interest after the better-than-expected UK employment report for April. The unemployment rate held steady at its 45-year low of 3.8%, while average earnings including bonuses slowed by less than expected. Specifically, the yoy rate slid to +3.1% from +3.3%, while the forecast was for a decline to +2.9%. The excluding bonuses rate ticked up to +3.4% from +3.3%, instead of sliding to +3.1% as expectations suggested.

GBP/AUD — Technical Outlook

Yesterday, we saw GBP/AUD finally breaking its short-term tentative downside resistance line drawn from the high of May 6 th. This morning, the pair also broke above its barrier, at 1.8310, which previously provided some resistance for the rate on May 29 th. It seems that GBP/AUD might continue drifting north and this is why we will remain somewhat bullish for now.

As for the Rest of Today’s Events

In the US, apart from the CPIs, we also get the EIA (Energy Information Administration) report on crude inventories for the week ended on June 7th. Expectations are for a 1.138mn barrels increase, following a gain of 4.572mn. That said, bearing in mind that the API report revealed a 4.850mn inventory build, we see the risks surrounding the EIA report as tilted to the upside.

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