US CPI in Focus for Rate Hike Clues

Sterling received a boost in the morning as Industrial Production surprised to the upside, despite underwhelming manufacturing data and a wider-than-expected trade deficit. The pound retraced some of those gains during the afternoon session.

Previous Day's Market Highlights

Sterling received a boost in the morning as Industrial Production surprised to the upside, despite underwhelming manufacturing data and a wider-than-expected trade deficit. The pound retraced some of those gains during the afternoon session.
 
Sterling-dollar again failed to hold the 1.3000 level, while sterling-euro reversed course after testing the 1.1100 level and meeting resistance. Euro-dollar broke through Wednesday’s high around 1.1765 but continued to hold below 1.1800 as it has done since the surprise jump in Tuesday’s JOLTS job openings data.
 
Yesterday’s US data disappointed as the Producer Price Index slowed further and weekly Initial Jobless Claims were higher than forecast.
 
Sterling-kiwi met resistance around 1.7900 but held above 1.7800, having fallen against the pound after the RBNZ held interest rates and emphasised the need for a lower kiwi dollar.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1038 1.1438 1.1003 3.80%
GBP / USD 1.2980 1.3272 1.2932 2.56%
EUR / USD 1.1759 1.1912 1.1390 4.37%
GBP/AUD 1.6513 1.6778 1.6269 3.03%
GBP / NZD 1.7813 1.7994 1.7398 3.31%
GBP / CAD 1.6533 1.6727 1.6238 2.92%

Today's Market Highlights

Attention today will primarily be on US CPI data out this afternoon (13:30 BST). A pick-up today, as forecast, could support the dollar, but the release otherwise poses a downside risk.
 
Whilst the labour market has continued to tighten, inflation has recently softened, causing some concern amongst Fed members when considering whether to raise interest rates later this year. CPI has slowed from 2.7% in February to 1.6% in June.
 
Fed Member Kaplan speaks at an annual continuing education event for accounting professionals (14:40 BST). Fed Member Kashkari speaks at the Independent Community Bankers of Minnesota Annual Convention (16:30 BST).
 
Next week the UK will be in sharp focus with the latest inflation and employment data, including wage growth. 

Today's Economic Calendar

Time Currency Release Consensus Previous
13:30 USD CPI YoY (Jul) 1.8% 1.6%
13:30 USD Core CPI YoY (Jul) 1.7% 1.7%
13:30 USD CPI MoM (Jul) 0.2% 0.0%
13:30 USD Core CPI MoM (Jul) 0.2% 0.1%
16:30 USD Fed Member Kashkari Speaks