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Forex Today: Dollar Consolidates Post-CPI Gains

This is what you need to know to trade today Wednesday September 14:

Following Tuesday’s impressive rally, fueled by US August inflation data, the DXY dollar index consolidates gains below 110.00 early on Wednesday. In the European economic calendar will be published industrial production data for july and the US Bureau of Labor Statistics will release producer price index figures later in the day. During the upcoming Asian session, market participants will closely monitor the release of the New Zealand Q2 GDP and Australia’s August employment report.

After US data showed that the consumer price index Core CPI rose to 6.3% in August from 5.9% in July, the dollar gained strength amid new aggressive expectations regarding the Fed. For its part, Wall Street’s main indices suffered heavy losses, with the Nasdaq Composite shedding more than 5% on the day. In European morning trading, US stock index futures are up around 0.2%, pointing to a modest improvement in risk sentiment. Meanwhile, the CME Group’s FedWatch tool shows that markets are pricing in a 34% chance of a 100 basis point Fed rate hike at its next monetary policy meeting.

See: US Inflation Analysis: Core CPI Rise Shatters Fed Pivot Narrative, Dollar King Returns to Throne

The EUR/USD lost over 150 pips on Tuesday before entering a consolidation phase below parity early on Wednesday.

The GBP/USD is struggling to stage a rebound and is trading in negative territory below 1.1500. The UK Office for National Statistics reported on Wednesday that annual inflation of the UK CPI decreased to 9.9% in August from 10.1% in July, but core CPI rose to 9.3% from 9.2%.

The USD/JPY came under heavy downward pressure and fell below 144.00 during Asian trading hours on Wednesday. Nikkei reported earlier in the day that the Bank of Japan carried out a “health check” of the currency exchange to learn the opinion of market participants on the valuation of the yen. According to the media, this is a sign that the Bank of Japan could be preparing an intervention in the market.

With the 10-year US Treasury bond yield gaining more than 2% and topping 3.4% on Tuesday, gold suffered heavy losses and fell towards $1,700. XAU/USD is now trading sideways near that level amid a lack of action in US yields.

The intense flight to the safe haven saw BTC/USD lose almost 10% on Tuesday, but the Bitcoin seems to have stabilized slightly above $20,000 at the moment. The ethereum it has already lost nearly 12% this week after Tuesday’s sharp drop. However, ETH/USD appears to have found support near $1,500, now gaining 2% on the day at $1,600.

Source: Fx Street

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