Daily FX Trading Update: UK CPI Disappoints, FOMC Minutes Next

The US dollar regained ground against its forex peers as data from the US economy came in mostly stronger than expected. Headline CPI rose 0.4% versus the 0.3% uptick expected while the core CPI posted the projected 0.2% increase. Industrial production rose 0.7%, higher than the estimated 0.3% reading, while both building approvals and housing starts gained. The FOMC minutes are up for release today and stronger hints about a June hike could spur more dollar gains.
The euro weakened to the dollar and yen but managed to bounce back against the comdolls and the pound. The region’s trade balance missed expectations at a surplus of 22.3 billion EUR versus the 23.1 billion EUR consensus. Euro zone final CPI readings are due today and no changes from the -0.2% headline figure and the 0.8% core figure are expected.
The pound managed to stay resilient despite weaker than expected UK CPI readings. The headline figure fell from 0.5% to 0.3% instead of holding steady while the core figure dropped from 1.5% to 1.2%. For today, the UK jobs report is due and a 4K increase in claimants is eyed. The jobless rate is expected to hold steady at 5.1% while the average earnings index could slide from 1.8% to 1.7%.
The franc was still in a weak spot even with stronger than expected data from Switzerland. Producer prices rose 0.3% versus the projected 0.1% uptick, also showing an improvement from the earlier flat reading. There are no reports due from the Swiss economy today.
The yen was able to rake in gains against its forex counterparts after the Japanese industrial production figure showed an upward revision from 3.6% to 3.8%. Earlier today, the Japanese GDP reading posted a stronger than expected 0.4% expansion versus the estimated 0.1% growth figure. Core machinery orders are lined up next.
Commodity Currencies (AUD, NZD, CAD)
The comdolls retreated from their recent rallies despite an API report indicating a draw of 1.1 million barrels from stockpiles. Data from Canada was weaker than expected, as manufacturing sales dipped 0.9%. In New Zealand, the GDT auction showed a 2.6% rebound in dairy prices but PPI readings missed expectations. PPI input fell 1.0% instead of gaining 0.3% while PPI output fell 0.2% instead of rising by 0.4%. In Australia, the quarterly wage price index rose 0.4%, short of the estimated 0.5% increase.

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.