Daily FX Trading Update: Chinese CPI Also Disappoints, UK Jobs Due – Oct 14, 2015

Daily FX Trading Update: Chinese CPI Also Disappoints, UK Jobs Due - Oct 14, 2015
The US dollar had a mixed performance as it acted mostly as a counter currency in recent trading sessions. Low-tier data from the US economy came in somewhat better than expected, with the NFIB small business index rising from 95.9 to 96.1. For today, the top-tier retail sales release is likely to have a stronger effect on the dollar, as the headline reading could show a 0.2% uptick while the core figure could print a 0.1% decline. Also due today are the PPI reports, with the headline figure slated to show a 0.2% decline and the core reading to show a 0.1% uptick.
The euro regained a bit of ground in recent trading sessions, even though data from Germany came in weaker than expected. The ZEW economic sentiment index plummeted from 19.1 to 1.9, indicating a sharp drop in optimism in the euro zone’s strongest economy. However, the region’s ZEW index still managed to come in line with expectations for a drop from 33.3 to 30.1. Euro zone industrial production and French CPI data are up for release today.
The pound retreated against its forex peers when the UK headline CPI printed a 0.1% decline instead of the projected flat reading for September. The core figure held steady at 1.0% instead of improving to the estimated 1.1% reading while the PPI showed a stronger than expected 0.6% rise in producer input prices. The UK jobs report is up for release today and a 2.3K drop in joblessness is expected. Traders are also likely to pay close attention to the average earnings index, which might climb from 2.9% to 3.1% and reflect stronger wage inflation.
The franc was able to advance against its rivals, as traders appear to be seeking an alternative safe-haven currency in the European region. Data from Switzerland came in line with consensus, as the PPI indicated the projected 0.1% dip in producer price levels. The Swiss ZEW economic expectations index is up for release today and a climb from the earlier 9.7 reading might give the franc an additional boost.
The Japanese yen took advantage of the run in risk aversion, as it raked in gains across the board. Data from Japan was actually weaker than expected, as the consumer confidence index fell from 41.7 to 40.6 instead of just dipping to 41.6. Preliminary machine tool orders fell by 19.1%, worse than the previous 16.5% drop. Earlier today, the Japanese PPI release printed a 3.9% fall in prices as expected.
Commodity Currencies (AUD, NZD, CAD)
The comdolls gave up more gains in yesterday’s trading, after China printed dismal import figures. The trade surplus was better than expected at 60.3 billion USD versus the projected 46.9 billion USD and the previous 60.2 billion USD, but the components revealed that this was mostly caused by a 17.7% drop in domestic demand. Later on, RBNZ Governor Wheeler hinted that they’re open to “some further easing” even as the country’s dairy industry showed a strong rebound. Earlier today, China printed a weaker than expected CPI of 1.6% instead of the estimated 1.8% figure and worse than the previous 2.0% reading.
To contact the reporter of the story: Samuel Rae at samuel@forexminute.com
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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.