10 May: Soft US PPI ahead of today’s CPI causes a pause in the US$ uptrend. China CPI, BOE Meeting ahead

By | May 10, 2018

 

The US$ has eased back a little today, while stocks are higher (DJI/S+P + 0.8%/0.9%) after some slightly softer data, easing concerns over a high US CPI figure later in the coming session, but also driven higher by the energy sector which was underpinned by the US decision to exit the Iran nuclear deal. The US PPI rose by just 0.1% (exp 0.3%) in April after strong gains in the first quarter, held back by a moderation in the cost of services such healthcare, easing fears that inflation pressures maybe building up. The other big mover on the day was WTI which climbed above $71 per barrel after an unexpected drop in US stockpiles and as the market came to terms with President Donald Trump’s decision to withdraw from the Iran nuclear deal.

Thursday will be a busy session with Interest Rate Decisions to come from both the RBNZ, due shortly (RBNZ Unchanged. Kiwi lower on dovish inflation outlook), and from the BOE. No change is generally expected from either although some are still seeking a rate hike from the BOE, which would surprise the market and send Cable sharply higher. In the meantime, the focus is more likely to be centered of the Statement coming from each Central Bank, as well as the Minutes due from the BOE. Elsewhere, the China, April CPI will be closely watched (exp -0.1% mm, +2.4% yy) Europe will mostly be out for the Ascension Day holiday although the UK Manufacturing/Industrial Production will add to the volatility in Cable. The other big event of the session will be the US CPI (exp 0.3% mm, 2.5% yy; Core exp 0.2% mm, 1.9% yy), which will determine the direction of US yields and markets in general.

CURRENCIES
EURUSD: 1.1850
Res  1.1875  1.1900  1.1930
Sup  1.1835  1.1820  1.1785
USDJPY: 109.74
Res  109.85  110.25  110.00
Sup  109.50  109.30  109.00
GBPUSD: 1.3546
Res  1.3580  1.3605  1.3635
Sup  1.3535  1.3515  1.3485
USDCHF: 1.0053
Res  1.0065  1.0080  1.0100
Sup  1.0025  1.0000  0.9985
AUDUSD: 0.7460
Res  0.7475  0.7490  0.7510
Sup  0.7430  0.7410  0.7385
NZDUSD: 0.6936
Res  0.6960  0.6980  0.6995
Sup  0.6930  0.6915  0.6900
INDICES / COMMODITIES
S&P: 2695
Res  2700  2720. 2740
Sup  2680  2655  2630
DJ30: 24494
Res  24600  24820  25065
Sup  24300  24130  23930
SPI200: 6112
Res  6115  6130  6150
Sup  6095  6080  6065
XAUUSD: 1313
Res  1320  1325  1330
Sup  1305  1300  1295
XAGUSD: 16.48
Res  16.60  16.75  17.00
Sup  16.35  16.20  16.05
WTI.fs: 71.18
Res  71.30  73.00  74.00
Sup  69.70  68.60  67.50