US session review: Dollar declines for third day

Data released: 

12:30 GMT Canada Manufacturing Shipments (MoM) (Jul) 1.7% 0.5% -0.1% 

12:30 GMT USA Consumer Price Index Ex Food & Energy (YoY) (Aug) 1.8% 1.8% 1.7% 

12:30 GMT USA Consumer Price Index (MoM) (Aug) 0.1% 0.2% 0.2% 

13:00 GMT USA Total Net TIC Flows (Jul) 1 $56.7B $-19.7B 

13:00 GMT USA Net Long-Term TIC Flows (Jul) $31.1B $-45.3B $-67.0B 

14:00 GMT USA NAHB Housing Market Index (Sep) 58 59 58 

The dollar declined, trading at almost the lowest in a month, before Federal Reserve policy makers decide whether to reduce monetary stimulus. 

The dollar had fallen sharply after former U.S. Treasury secretary Larry Summers removed himself from consideration to run the Federal Reserve. Summers was seen as relatively hawkish. 

Data released Tuesday showed on an annual basis US inflation was at 1.5% in August following a 2% reading in July. This result is slightly below forecasts of +1.6%. Month-over-month CPI grew 0.1%, down from the previous result of +0.2% and slightly against expectations of remaining at the same level. 

Annual CPI excluding Food and Energy rose 1.8%up from +1.7%, as projected. Month-over month CPI excluding Food and Energy grew 0.1%, following +0.2%. Both results are in line with projections. 

EURO 

The euro strengthened for a second day against the dollar and yen after an industry report showed German investor confidence climbed more than forecast, adding to evidence Europe’s largest economy is gaining momentum. 

The ZEW Center for European Economic Research said its index of German investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 49.6 in September from 42 in August. That’s the highest level since April 2010. 

"The financial market experts hold the view that the German economy is still gaining momentum. In particular, the experts’ economic optimism has increased due to the improved economic outlook for the Eurozone – although recently released economic data for Germany have fallen short of expectations", said ZEW President Dr. Clemens Fuest, in a statement accompanying the data. 

The euro has gained 4.6% this year. 

EUR/USD recovers from session lows on $1.3324 and currently holds near $1.3350, below yesterday’s highs on $1.3380 (initial resistance). Strong resistance comes at $1.3400 (Aug 23 highs) with a break above targets $1.3450 (Aug 20 high). Initial support remains at $1.3320 (also last week’s highs) and $1.3300 (channel line from Sep 6). 

POUND 

The pound surrendered initial gains after headline consumer prices in the British economy rose 2.7% on a yearly basis, banging on estimates. The Core print expanded 2.0% over the last twelve month, missing the median at 2.1% ann matching July’s reading. Producer prices also came in below expectations, rising 1.6% YoY vs. 1.8%. 

Next event risk for the pound will be tomorrow’s BoE minutes and Retail Sales on Thursday. 

GBP/USD tries to recover, but remains below yesterday’s high on $1.5960. Above resistance comes at $1.6000. Initial support is around $1.5880 (Friday’s highs and Jan 31 high), extending to $1.5860 (channel line) and $1.5780 (Friday’s lows). 

YEN 

The Japanese yen holds within the narrow range versus the US dollar. 

USD/JPY retreats from Y99.30. Strong support comes at Y98.50 (channel line from Aug 28) with a break under support is around Y98.00 (earlier broken channel line from Jul 7). Minor resistance placed at Y100.00 (Friday’s highs) and Y100.60 (Sep 11 highs). 

DATA PREVIEW: 

There is no key data for this evening.

Source of information>>

More information>>