USD in Focus Ahead of CPI Data

The euro was softer against both the pound and the dollar yesterday. Sterling-euro regained 1.1350 and euro-dollar briefly fell below 1.1400. Sterling-dollar made headway towards 1.2950.

Previous Day's Market Highlights

The euro was softer against both the pound and the dollar yesterday. Sterling-euro regained 1.1350 and euro-dollar briefly fell below 1.1400. Sterling-dollar made headway towards 1.2950.
 
The US’s Producer Price Index slowed less than forecast to 2.0% from 2.4%, while the core index slowed more than forecast to 1.9% from 2.1%. Fed Chair Yellen didn’t deviate from recent comments during her second day of semiannual monetary policy testimony.
 
The Canadian dollar pulled back from its strongest levels against the pound after the BoC hiked interest rates on Wednesday. The sterling-loonie rate pushed back towards 1.6500. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1350 1.1469 1.1176 2.55%
GBP / USD 1.2958 1.3031 1.2589 3.39%
EUR / USD 1.1415 1.1490 1.1119 3.23%
GBP/AUD 1.6716 1.7107 1.6612 2.89%
GBP / NZD 1.7697 1.7881 1.7338 3.04%
GBP / CAD 1.6496 1.6978 1.6354 3.68%

Today's Market Highlights

Attention today will largely be on the US, which releases Retail Sales and CPI data (13:30 BST). Retail Sales are forecast to pick up from May to June, which may offer the dollar support but could be offset by an expected further slowdown in CPI to 1.7% from 1.9%.
 
The data will be closely watched for implications for the timing of the next rate hike. The CME FedWatch Tool currently indicates that markets are pricing in a 54.7% chance of a December rate hike.
 
Traders will also keep an eye on Capacity Utilization, Industrial Production, and Michigan Consumer Sentiment figures (14:15, 15:00 BST). Fed Member Kaplan speaks at the Center for Economic Studies of the Private Sector in Mexico City (14:30 BST). 

Today's Economic Calendar

Time Currency Release Consensus Previous
11:00 EUR Trade Balance s.a. (May) €20.2B €19.6B
13:30 USD Retail Sales MoM (Jun) 0.1% -0.3%
13:30 USD Core Retail Sales MoM (Jun) 0.2% -0.3%
13:30 USD CPI YoY (Jun) 1.7% 1.9%
13:30 USD Core CPI YoY (Jun) 1.7% 1.7%
13:30 USD CPI MoM (Jun) 0.1% -0.1%
13:30 USD Core CPI MoM (Jun) 0.2% 0.1%
14:15 USD Capacity Utilization (Jun) 76.8% 76.6%
14:15 USD Industrial Production MoM (Jun) 0.3% 0.0%
14:30 USD Fed's Kaplan Speaks
15:00 USD Preliminary Michigan Consumer Sentiment Index (Jul) 95.0 95.1