Inflation data to add more volatility this week

<p>The pound has had a strong week where we started off around 1.4622 on the open up until now where we sit 300 pips higher at […]</p>

The pound has had a strong week where we started off around 1.4622 on the open up until now where we sit 300 pips higher at the open today at 1.4925. We started the week with the UK CPI which was as expected at 0.0%, but the climb has continued to push higher even with the General Election up and coming.

Today the average earnings index is released expected to be 1.8% same as last, this is becoming a key data release due to the rate hike guidance. The claimant count change is expected to weaken to -29.1k from -31k, and the unemployment rate expected to drop to 5.6% from 5.7%. All in all, this is an important morning for the UK and the pound, to be first tested on its gains this week.

The euro also had a rally this week after opening at 1.0600 and now at 1.0700, which briefly broke 1.0800 last night, mainly after the ECB kept rates at low levels and satisfied the markets that the QE will work, this pushed up above the 1.0700 where we have sat for the last couple of days. The data out is the final CPI y/y which is expected to be unchanged at -0.1%, and the final core CPI y/y is expected not to change at 0.6%.

The USD has taken the hit this week against all its peers. If we take a look at the US Dollar Index that started the week up at 99.66 to now 97.89, it correlates with the weakness across the board. This mainly has come in the form of poor data releases from the retail sales number, empire state manufacturing and unemployment claims, all coming in under expectations.
Today’s data will no doubt add the volatility of the USD with CPI and Core CPI expected to be released at 0.2% each the same as last.

The CAD has got most off guard this week with a huge fall from the open at 1.2574 to today’s open of 1.2180 a huge 394 pips, this come as the weak US and the strong oil correlation between the pair where oil has rallied this week.
Today’s data comes from the core CPI which is expected to be weaker at 0.3% from 0.6% and core retail sales expected at 0.7% from previous -1.8%.



 1.0650-1.0540-1.0450 | Resistance 1.0850-1.0930-1.1040




1.2110-1.2030-1.1920 | Resistance 1.2300-1.2410-1.2490



Supports 1.4840-1.4745-1.4680 | Resistance 1.5000-1.5070-1.5160

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.