Daily FX Trading Update: NZ CPI Beats Expectations, UK CPI Next

The Greenback pulled back from its rallies after medium-tier US reports disappointed. Industrial production posted a bleak 0.1% uptick instead of the projected 0.3% gain for September while the August reading was downgraded to show a sharper decline. The Empire State manufacturing index slipped deeper into negative territory instead of showing the estimated +1.1 figure. For today, US CPI readings are due, with the headline figure likely to show a 0.3% increase and the core figure expected to post a 0.2% gain.

The euro bounced against the dollar and the yen but was still in a weak spot against the commodity currencies. Euro zone final CPI readings were unchanged at 0.4% for the headline figure and 0.8% for the core figure. There are no reports due from the euro zone economy today.
The pound made a bit of a comeback against the dollar but continued to consolidate against the yen. The UK CB leading index posted  a flat reading, which is an improvement from the earlier 0.2% decline. UK CPI is up for release and stronger price pressures are eyed due to the weaker pound, with the headline figure slated to rise from 0.6% to 0.9% and the core figure projected to tick higher to 1.4%.
The franc was barely able to take advantage of dollar weakness as it gave up some ground to the euro and pound. There were no major reports out of Switzerland, though, and none are due today so these moves could be dependent on market sentiment.
The yen had a mixed performance as it simply reacted to country-specific events. Japan’s industrial production figure was downgraded from 1.5% to 1.3% in August, underscoring the need for additional BOJ stimulus. There are no reports due from Japan today.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were mostly stronger, as the Loonie got a boost from higher Canadian foreign securities purchases even with news that Iran could ramp up production to 5 million barrels per day. Meanwhile, the Kiwi also drew support from a higher than expected 0.2% gain in quarterly NZ CPI versus the projected flat reading. The Aussie was also able to rally after the release of the RBA minutes which contained upbeat forecasts for commodity prices and growth, although it had a bit of jawboning against AUD strength. New Zealand’s GDT auction is lined up next.
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.