Forex Today – Asian Session: Dollar Falls Despite Encouraging US Data

During the Asian session, the highlight will be the release of Chinese economic data, including GDP figures. In addition, Bullock of the RBA is scheduled to participate in a press conference. During the European session, the focus will be on the release of UK inflation data.

Here’s what you need to know on Wednesday, October 18:

Another round of upbeat US economic data is released. September retail sales rose 0.7%, beating the market consensus of 0.3%. August figures were revised upwards. September industrial production rose 0.3%, beating expectations for a flat reading. These positive figures initially boosted the Dollar, but the impact was short-lived. The DXY closed with slight losses around 106.20.

Although US Treasury yields rose sharply, rising yields across the Atlantic offset the impact on the Dollar. The 10-year Treasury yield hit 4.86%, while the German yield rose 3.50% to 2.88%.

Despite the positive economic news, the reception from Wall Street was mixed. The Dow Jones rose 0.04%, while the Nasdaq fell 0.25%. Earnings season continues on Wednesday, with Tesla, Morgan Stanley, Abbott, Netflix and other companies reporting their results.

Wells Fargo on US retail sales:

Consumers spend more in bars and restaurants, at car dealerships and on the Internet. This is true both on a monthly basis and last year’s trend. Consumers are just looking to have a good time, and it’s hard to resist seeing the upside risk in the outlook.

During the European session, the Japanese Yen (JPY) saw a strong rally in response to reports suggesting that the Bank of Japan (BOJ) would likely revise its inflation forecasts for fiscal 2023 and 2024. However, the Yen’s momentum It was short-lived and subsequently retreated, erasing all its gains. The USD/JPY pair found support around 148.75 and, following encouraging US retail sales data, gained strength, breaking above 149.70. The pair is now approaching the 150.00 level, which is considered a potentially important area for intervention by the authorities.

The Euro (EUR) strengthened against the Swiss Franc (CHF) and the British Pound (GBP), supported by rising Eurozone bond yields. The pair EUR/USD It briefly peaked near 1.0600 before retreating, but held above the 1.0560 level. In the Eurozone, the final readings of the Consumer Price Index (CPI) for September and construction production for August will be published.

The pair GBP/USD It continues to trade within a range of 1.2130 and 1.2225 with no clear direction. Markets’ attention is now focused on UK inflation data due for release on Wednesday.

The Canadian Dollar (CAD) fell broadly after Canada reported a 0.1% decline in the Consumer Price Index (CPI) for September, against expectations for a 0.1% rise. The annual inflation rate fell from 4% to 3.8%. USD/CAD It initially traded above 1.3700, but then retreated to the 1.3640 area, paring its gains.

During the Asian session, the New Zealand Dollar (NZD) remained weak and continued to be affected by the third quarter inflation reading in New Zealand, which was lower than expected. The NZD/USD pair trimmed losses during the American session, but ultimately ended lower, slightly below 0.5900. Currently, the pair is trading near the key support zone of 0.5860.

On Tuesday, the Australian Dollar (AUD) outperformed, boosted by the minutes of the latest Reserve Bank of Australia (RBA) meeting. The AUD/USD pair rose for the second day in a row, but encountered resistance as it reached the 20-day SMA at 0.6380 and subsequently retreated to 0.6360. On Wednesday, RBA Governor Bullock will speak at the annual summit of the Australian Insurance Authority.

Gold rose despite rising yields but failed to regain levels above $1,930. The Silver it bounced strongly off $22.35, rising towards $23.00.