Daily FX Trading Update: UK Inflation at Record Lows – Jan 14, 2015

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Daily FX Trading Update: UK Inflation at Record Lows - Jan 14, 2015

The US dollar stayed supported by risk aversion throughout the FX trading day as geopolitical tension and falling commodity prices kept risk-taking in check. Data from the US economy was stronger than expected, with the JOLTS job openings report showing a gain to 4.97M and the IBD/TIPP economic optimism index climbing from 48.4 to 51.5. Later today, retail sales data are up for release and upside surprises could be seen. The headline figure is slated to post a 0.2% uptick while the core figure might show a 0.1% increase.

The euro had a mixed FX trading performance as it gave up ground to the dollar and the yen but managed to advance against the commodity currencies. Data from the euro zone was also mixed, with the German WPI printing a 1.0% decline and the Italian industrial production report showing stronger than expected gains of 0.3%. Euro zone industrial production data is due and a flat reading is expected.

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The pound managed to shrug off weaker than expected UK inflation readings as most traders have already priced in this possibility. The headline CPI fell from 1.0% to 0.5% in December, spurred by falling oil prices and declining prices of supermarket goods. This has been welcomed by the UK Chancellor though, as he pointed out that this could spur spending and growth later on. Only the CB leading index and a speech from BOE Governor Carney are due today.

The franc resumed its FX trading slide to the dollar despite the lack of major reports from Switzerland. There are still no reports due from the Swiss economy today, suggesting that USDCHF could react more to US data and risk sentiment.

The yen advanced to its FX trading counterparts as risk aversion extended its stay in the financial markets. The Japanese current account balance came in better than expected while bank lending showed a 2.6% gain, both of which supported the yen in yesterday’s Asian trading session. There are no top-tier reports due from Japan today.

The comdolls were off to a decent start in today’s session but were weighed down by the tumble in copper prices, particularly the Australian dollar. There have been no actual economic reports printed from these economies recently, indicating that risk sentiment is driving price action. There are still no top-tier reports lined up from the comdoll economies for the rest of today’s FX trading sessions.

To contact the reporter of the story: James Brennan at james@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.