Dollar Softens; CPI Data in Focus

The dollar was a touch softer yesterday against the pound and euro. Today, final Eurozone and Canadian CPI are in focus.

Previous Day's Market Highlights

UK Retail Sales surprised to the upside yesterday but had a limited impact on the pound. US housing data were mixed as Building Permits rose more than forecast but Housing Starts rose less than expected.
 
Overall, exchange rate movements were relatively contained. Sterling-euro held below 1.12, while the dollar was a touch softer and sterling-dollar inched higher above 1.27. Euro-dollar largely held in the upper end of the 1.13-1.14 band. The pound continued to trade at some of its lowest levels against the Canadian dollar since November 2017, having regained around a cent from Wednesday’s lows.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1184 1.1294 1.1073 1.96%
GBP/USD 1.2735 1.3213 1.2666 4.14%
EUR/USD 1.1386 1.1750 1.1301 3.82%
GBP/AUD 1.7514 1.7825 1.7284 3.04%
GBP/NZD 1.9306 1.9457 1.9077 1.95%
GBP/CAD 1.6741 1.7305 1.6596 4.10%

Today's Market Highlights

Yesterday wrapped up the raft of UK data. This morning’s Eurozone Current Account release showed a higher than forecast surplus, adding to support for the euro. Up next for the single currency are final July inflation figures, which are forecast to remain unrevised at 2.1% for the headline figure and 1.9% for the core figure. If there are no changes, the release may have little impact on the euro.
 
In the afternoon, Canadian CPI figures are also projected to show little change (13:30 BST), which may in turn have a more muted impact on the currency. Overall, exchange rates may continue to trade around current levels as a result of a relatively quiet data calendar. However, markets will continue to keep an eye on any trade or geopolitical developments.
 
Highlights next week include the latest meeting minutes from both the Fed and the ECB, as well as Eurozone PMIs and US Durable Goods Orders.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:00am EUR Current Account n.s.a. (Jun) €23.2B €22.4B
10:00am EUR CPI YoY (Jul) 2.1% 2.1%
10:00am EUR Core CPI YoY (Jul) 1.9% 1.9%
1:30pm CAD CPI YoY (Jul) 2.5% 2.5%
1:30pm CAD BoC Core CPI 1.3% 1.3%
3:00pm USD Michigan Consumer Sentiment Index (Aug) 98.0 97.9

Caxton