Forex Today: Dollar remains weak despite PPI and FOMC Minutes, CPI Next
|During the Asian session, the New Zealand Food Price Index is due to be released; in Japan, the Producer Price Index and Machinery Orders. Additionally, the Melbourne Institute will release its inflation expectations survey. Later in the day, market attention will be on the UK monthly GDP data, the ECB minutes, and the US Consumer Price Index.
Here is what you need to know on Thursday, October 12:
The US Dollar finished flat despite higher-than-expected US wholesale inflation and the release of the FOMC minutes. The Greenback remains weak as US yields continue to pull back. The stock market in Wall Street saw another rise, driven by a risk-on sentiment late in the session, which did not help the US Dollar.
The US Producer Price Index (PPI) accelerated unexpectedly in September, rising from 2.0% to 2.2% compared to the expected 1.6%. However, this did not trigger major concerns. The crucial moment will be on Thursday with the release of the Consumer Price Index (CPI). The annual rate is expected to decrease in September to 3.6% from 3.7%. Volatility is expected. The weekly Jobless Claims report will also be released.
The FOMC minutes showed a divergence of perspectives, reinforcing the data-dependent approach and indicating that a significant rebound in inflation would be necessary to reach a consensus for more rate hikes.
FOMC minutes:
Several participants commented that, with the policy rate likely at or near its peak, the focus of monetary policy decisions and communications should shift from how high to raise the policy rate to how long to hold the policy rate at restrictive levels.
Following the FOMC minutes, the DXY pulled back and finished flat at 105.75, rebounding from near the strong support at 105.50. The 10-year US Treasury yield dropped to 4.55%.
UR/USD held onto recent gains and remained near the strong resistance area at 1.0630. The pair maintains a bullish tone, but after continuous rising for over a week, a consolidation phase is looming. However, the US CPI number could bring volatility and decisive breaks. The European Central Bank (ECB) will release the accounts of the September meeting.
USD/JPY rose and closed above 149.00. It continues to move sideways between 148.20 and 149.10. Japanese data due on Thursday includes Machinery Orders and the Producer Price Index.
GBP/USD posted a second consecutive daily close above the 20-day Simple Moving Average (SMA) as the recovery continues. It is hovering around 1.2300, showing some signs of exhaustion. The UK will release GDP, Industrial Production, and trade data on Thursday.
AUD/USD remains near the 20-day SMA, and the 55-day SMA awaits at 0.6450; above that area, the Aussie dollar could rise further. Below 0.6375, the outlook could turn neutral. The Melbourne Institute will release the Survey of Consumer Inflationary and Wage Expectations.
NZD/USD declined after rising for five consecutive days but remained above 0.6000 and held above the 20-day SMA. The pair peaked near the 100-day SMA at 0.6056. The Food Price Index is due early on Thursday in New Zealand.
USD/CAD moved sideways for the second day in a row around 1.3600. The Canadian Dollar held relatively well despite the decline in crude oil prices.
Gold broke above $1,860 and jumped to $1,875, boosted by lower yields and the weaker dollar. Silver joined the rally, climbing above $22.00.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.