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USD Awaits Friday’s Inflation Figures

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USD

The Greenback edged lower vs. its G-10 rivals, as the recent geopolitical tensions between Washington and Pyongyang continue to rule the headlines. On the economic data front, preliminary U.S. worker productivity for the second quarter went against anticipations and rose as much as 0.9%, but the trend remained weak, indicating that strong economic growth could remain elusive.

On the economic calendar for Thursday, New York Fed President William Dudley, who is considered one of the most powerful members of the Federal Open Market Committee is scheduled to speak. In addition, markets are awaiting the U.S. producer price index data due later in the session, as traders are interested to study the figures to get an idea of the direction of the U.S. inflation and any impact the data could have on the Federal Reserve's monetary policy.

Despite the market’s focus on North Korea, Friday’s inflation figures, which is expected to come in at 0.1%, unchanged from the previous month, is still a focal point for the Greenback.

  • The U.S. dollar index (DXY), which measures the Greenback against a basket of currencies, fell as much as 0.06%, to settle at 93.49 pips.

EUR

The common currency weakened against the US Dollar and the yen yesterday. The single currency fell as much as 0.28% vs. the Greenback, to settle at $1.1726.  With regards to data, yesterday Italy reported a stronger than expected industrial production figure of 1.1% against the expected 0.2%. Looking ahead to the rest of the day, French industrial production and Italian trade balance are due.

GBP

The Sterling pound lacked direction yesterday but at the end of the day dropped against the common currency and the franc. There were no reports out of the British economy yesterday but today we have the goods trade balance and the manufacturing production index due. If either reports come out weaker than expected this may have a strong impact on the currency’s direction because these reports are considered leading indicators of growth.

JPY

The Japanese Yen came out strong owing to risk-aversion on the back of North Korea’s missile threats. The rally however paused towards the end of the North American session on profit-taking. On the data front, the Japanese core machinery orders came in weaker than expected at 1.9% against a predicted 3.6% while the PPI came in stronger than predicted at 2.9%.

Gold

Gold prices held steady near two-month highs hit in the previous session, boosted by safe-haven demand triggered by increasing tensions between North Korea and the United States. On the economic data release front, traders are waiting for U.S. producer inflation data that may indicate a shift in the Greenback’s weakness this year. U.S. gold future for December delivery went up about 0.44%, to settle at $1,284.90.

Oil

Earlier today, Oil futures edged up as the U.S. crude inventories fell more than anticipated, but the market settled into the middle range of quiet trading.

On the news front, Energy Information Administration (EIA) said the U.S. crude stockpiles declined last week as refineries supported output to the highest percentage of capacity in 12 years. U.S. oil inventories edged down by 6.5 million barrels last week, more than the expected decline of 2.7 million barrels.

Light Sweet Crude Oil Futures rose as much as 17 cents, or 0.34%, to settle at $ 49.73, while Brent crude, up 0.3%, to settle at $52.88 after declining slightly earlier.

The most important economic events:

  • GBP NIESR Gross Domestic Product Estimate (JUL): (GMT 12:00) – Medium – Forecast (0.3%) – Previous (0.3%).
  • USD Initial Jobless Claims (AUG 05): (GMT 12:30) – Medium – Forecast (240k) – Previous (240k).
  • USD Continuing Claims (JUL 29): (GMT 12:30) – Medium – Forecast (1960k) – Previous (1960k).
  • USD Monthly Budget Statement (JUL): (GMT 18:00) – Medium – Forecast (-$52.0b) – Previous (-$52.0b).
  • AUD RBA's Lowe Before House Economics Commitee in Melbourne: (GMT 18:00) – Important

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