This guest article was written by Ashwin Peswani who is the Regional Director of .
Even if the US PPI failed to match marks, the US dollar maintained its run north on Wednesday as Trump’s signals towards creating an ‘Infrastructure Bank’, coupled with an uptick in manufacturing output, signalled optimism for the world’s largest economy.
Moreover, hawkish statements favoring a December rate-hike from some Fed members, including the presidents of the Federal Reserve Bank of St. Louis and the Philadelphia Federal Reserve, provided additional strength to the USD.
The EUR remained sluggish with no major releases and the GBP extended its recent declines on mixed job market details. The JPY managed to surge while gold couldn’t strengthen on weaker safe-haven demand. Further, commodity currencies, namely the AUD, NZD and CAD, kept extending their losses with a higher than forecast US crude stockpile and Trump’s expected tough stance on China continuing to indicate a weaker day for the commodity basket.
As we move towards the heavily filled US calendar, the market seems to be trading a bit cautiously. However, a dip in the Australian labor participation rate is a red signal for Aussie traders. On the economic front, UK Retail Sales, US CPI, Building Permits, the Philly Fed Manufacturing Index and testimony by the Fed chair could offer volatile market moves, while an informal meeting of OPEC members and Russia in Doha to discuss month-end moves by the cartel may provide noticeable fluctuations in crude prices.
Observing the details, US inflation becomes the key reading of the day, It could help us foresee the December actions of the US Federal Reserve which is likely to print a higher figure, signalling a strong move up for the USD.
Additionally, the Fed chair’s testimony may also be observed closely to look for signs of Trump’s effect on the Fed’s monetary policy going forward and whether the central bank stands ready for next month’s much awaited move.
In case of hawkish comments from Janet Yellen, the greenback could gain a valid boost to its running advances. Furthermore, UK Retail Sales, an important part of the British GDP, may print a higher figure and could help trim some of the latest losses by the GBP; however disappointment could have major repercussions and bring prices to further down.
Cheers and safe trading,
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