INTERNATIONAL CURRENCY BUZZ
Forex – U.S. Dollar Slumps on Inflation Data
Forex – GBP/USD surges to 1.3100 handle on weaker US CPI figures
Forex – EUR/USD closer to 1.1700 on Draghi, softer US CPI
Spot navigates fresh tops for the current month boosted by a sharp pick up in the selling pressure around the greenback post-CPI results. The disappointing results from US inflation figures forced yields of the US 10-tear benchmark to tumble to fresh lows in the 2.95% neighbourhood. The shared currency also derive some buying interest after President Draghi disappointed EUR-bears today at the ECB meeting, where the central bank left unchanged its monetary conditions. At his press conference, Draghi noted that uncertainty surrounding underlying inflation appears mitigated, while he stressed that updated forecasts on inflation and economic growth confirm the central bank’s assessment. The ECB now sees inflation running at an annualized 1.7% for the current month, 2019 and 2010, unchanged from the previous report. However, theECB revised lower its forecasts for GDP for 2018 and 2019 and now expects the economy to expand 2.0% and 1.8%, respectively.
The GBP/USD pair quickly reversed the post-BoE dip to 1.3035 area and rallied over 60-pips, to the 1.3100 neighborhood on softer US CPI figures. The US Dollar weakened across the board after the latest US consumer inflation report, released this Thursday, showed that the headline CPI increased 0.2% in August and the yearly rate dropped to 2.7% from 2.9% previous. Meanwhile, the core CPI also showed a modest 0.1% m/m rise and indicated that the recent upturn in inflation might have already started easing, dampening prospects for aggressive Fed monetary policy tightening cycle. The same was evident from a sudden plunge in the US Treasury bond yields, which exerted some additional downward pressure on the greenback and lifted the pair to an intraday high level of 1.3097, the highest since August 2. Against the backdrop the latest Brexit optimism, the prevalent USD selling bias now seems to have opened room for an extension of the pair’s ongoing positive momentum, possibly towards testing 100-day SMA hurdle near the 1.3200 handle.