Daily FX Trading Update: UK Headline and Core CPI Disappoint – Mar 25, 2015

Daily FX Trading Update: UK Headline and Core CPI Disappoint - Mar 25, 2015

The US dollar continued to weaken against most of its FX trading counterparts, despite stronger than expected data from the US economy. Core CPI came in stronger than expected with a 0.2% gain versus the estimated 0.1% uptick while the headline CPI was in line with expectations of a 0.2% rebound. The flash manufacturing PMI also beat the consensus, as it climbed from an upgraded 55.1 reading to 55.3. New home sales jumped from 500K to 539K, surpassing estimates at 466K. For today, durable goods orders data is due, with the headline and figures likely to post 0.3% gains.

The euro continued its steady rise to the dollar while giving up ground to its other FX trading counterparts, even though PMI readings from France and Germany weren’t all bad. In fact, the German flash manufacturing PMI and the euro zone flash services PMI beat expectations while the German and French services PMI came in as expected. German Ifo business climate data is up for release today and the index is expected to climb from 106.8 to 107.4.

FX Trading News

The pound was in a weak spot in recent FX trading, thanks to weaker than expected UK CPI readings. As the BOE predicted, both headline and core inflation continued to tumble, with the former posting a flat reading and the latter showing a drop from 1.4% to 1.2%. Underlying inflation readings such as the PPI and HPI also hinted at weaker price pressures down the line. Only the BBA mortgage approvals report is up for release today and it might climb from 39.4K to 39.6K.

The franc edged higher to most of its major FX trading counterparts, as the lack of data from Switzerland kept its currency as a viable safe-haven alternative. The Swiss UBS consumption indicator is up for release today and an improvement from the previous 1.24 reading could mean more gains for the franc.

The yen had a mixed FX trading performance, as it advanced to the dollar and pound but gave up ground to its other rivals. Japan’s flash manufacturing PMI dropped from 51.6 to 50.4, reflecting a slowdown in industry expansion for March. No major reports are due from Japan today, indicating that the yen could act as a counter currency and be sensitive to risk sentiment.

The comdolls were still on the risk appetite train in recent FX trading as they advanced against most of their counterparts, despite weaker than expected HSBC flash manufacturing PMI from China. New Zealand printed a weaker than expected trade surplus of 50 million NZD versus the estimated 375 million NZD figure. No major reports are due from the comdoll economies today.

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.