During the Asian session, market participants will closely monitor the Australian employment report. In addition, data from Japan, such as machinery orders and industrial production, will be published. Later, the European Central Bank (ECB) will announce its decision, and key data such as jobless claims, retail sales and the Producer Price Index will be published in the United States.
Here’s what you need to know on Thursday, September 14:
The Dollar Index finished slightly higher on Wednesday, but remained within recent ranges, mirroring the behavior of major currency pairs. US yields initially rose but then retreated and the 10-year yield stood at 4.25%. Wall Street reported mixed results as investors remained cautious.
The US Consumer Price Index (CPI) for August showed an increase of 0.6% in the month and a rebound of the year-on-year rate from 3.2% to 3.7%, exceeding market expectations of 3.6%. However, the underlying year-on-year rate slowed, as expected, from 4.7% to 4.3%. The dollar’s initial reaction was positive, but then it retreated. The numbers did not significantly alter the outlook for the upcoming Federal Open Market Committee (FOMC) meeting, and the market continues to anticipate a pause in monetary policy.
TD Securities on US consumer inflation:
In our view, today’s CPI report should not represent a significant change for Fed policymakers ahead of the September FOMC meeting. However, it keeps alive the chances of a further rate hike for the November/December meetings, especially if we see a continuation of the acceleration in core inflation in the September CPI report.
Between the ECB decision at 12:15 GMT and ECB President Lagarde’s press conference at 12:45 GMT, important US economic reports will be published at 12:30 GMT, such as retail sales, the Producer Price Index and unemployment benefit applications. This convergence of key events is likely to cause increased volatility across financial markets.
The European Central Bank (ECB) will hold its monetary policy meeting on Thursday. Although a pause in monetary policy is expected, reports suggesting that staff will increase inflation forecasts have increased speculation about a possible rate hike. This event could trigger great volatility in the euro. Market participants will also closely monitor ECB President Lagarde’s press conference for further information and guidance.
EUR/USD remains above 1.0700, but upside is capped around 1.0770. The pair lacks a clear bias, and significant swings are likely on Thursday.
The British economy contracted 0.5% in July, worse than the expected 0.2% contraction, following a 0.5% expansion in June. The GBP/USD pair initially fell and reached the 200-day simple moving average, but later rose again to 1.2500.
USD/JPY rose on Wednesday but remains below recent highs. The pair is around 147.50 and 148.00 acts as key resistance. In Japan, important data such as July Machinery Orders and Industrial Production will be released on Thursday.
In Switzerland, the Production and Import Price Index will be published on Thursday. The Swiss franc is likely to experience strong volatility due to the ECB decision. USD/CHF posted its highest daily close in two months at around 0.8930. The bias is bullish, but the resistance level of 0.8950 remains intact.
USD/CAD closed lower around 1.3550 after hitting the lowest level since September 1 at 1.3520. Canada will report on wholesale sales for July.
AUD/USD managed to hold above 0.6400 and continues to move around the 20-day SMA at 0.6420. The Melbourne Institute will release its report on inflation expectations and later the Australian Bureau of Statistics will report on employment. A positive change of 23,000 in employment is expected after last month’s decline of 14,600.
The New Zealand Dollar outperformed on Wednesday. NZD/USD continues to test the 20-day SMA at 0.5920. AUD/NZD retreated after hitting its lowest level in a month on Tuesday.
Metals remain bearish, with Silver trading below $23.00 and Gold looking for $1,900. The XAU/USD pair settled at $1,908, a sign of the lowest close in three weeks.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
