US Dollar Higher As CPI Beats Forecast

US Dollar Higher As CPI Beats Forecast

By: Oliver Miller | Where To Trade | On:22-10-2014 10:50
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Key Highlights

  • US consumer price index data registered an increase of 1.7% in September 2014, compared to the expectation of 1.6%.
  • Canadian retail sales declined by 0.3% in August 2014, compared with the last time increase of 0.5%.
  • US MBA Mortgage Applications released by the Mortgage Bankers Association came in at 11.06%, up from the previous reading of 5.6%.
  • Bank of England released MPC meeting minutes, which basically gave no signs of hope to the British pound buyers.
  • There was no change in the votes, which stood at 7-2. There were two members voted for a rate hike just as expected.
  • GBPUSD crashed and moved lower towards the 1.6010 level where it managed to find buyers.

 

US Consumer Price Index

Earlier during the NY session, the US consumer price index was released by the US Bureau of Labor Statistics. The market was expecting the US consumer price index to increase by 1.6% in September 2014, compared with the last year. However, the US consumer price index registered an increase of 1.7% before seasonal adjustment. The outcome was certainly better than the market expectation. If we consider month-over-month change, then the US CPI increase by 0.1 percent in September on a seasonally adjusted basis. This was again better, as the market was not expecting any increase in the US CPI. Not to forget, there was a decrease of 0.2% last month. So, overall it might lift the US dollar in the short term.  

 

Where To Trade - US CPI - 22-10-2014

 

The reaction from the US dollar buyers was obvious, as the pairs such as EURUSD and AUDUSD spiked lower. However, there is a lack of momentum noted, which is not good for the US dollar. Let us see how it trades moving ahead.

 

Bank of England Minutes

There was an important economic release lined up during the London session in the UK. The Bank of England released the meeting minutes. The outcome was mostly in line with the expectation. The bank decided to keep the interest rates unchanged at 0.5%. However, the most important thing the market was looking at was the change in votes. There was no change in votes, as the report mentioned that seven members of the Committee - the Governor, Ben Broadbent, Jon Cunliffe, Nemat Shafik, Kristin Forbes, Andrew Haldane and David Miles) voted in favour of the proposition and Ian McCafferty and Martin Weale voted against the proposition, preferring to increase Bank Rate by 25 basis points. This was broadly expected. However, the market reaction was not bullish, as the GBPUSD pair moved lower after the release.

Technically, the GBPUSD pair traded towards the 1.6010 level where it managed to find buyers. The pair is currently retracing higher from the Intraday low, but the overall momentum is still bearish for the pair. Moving ahead, the broken support area of 1.6120 might act as a strong resistance for the pair. If the pair climbs closer to the mentioned level, then the chance of a failure is more compared to more gains.

Oliver Miller

Oliver Miller

"Patience is the key for success"

Oliver Miller is one of the best financial analyst with 18 years of online trading experience

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