US CPI disappoints as USD falls

Another day and the yen is still the main talking point after a rally up to new fresh seven-year highs touching 118.96; it now has fallen back 100 points below. The move happened more on the back of weaker US CPI yesterday showing a concern for the FED after the end of QE last month.  Currently we are trading just below 118.00 and looking weak as overnight comments from Japan’s financial minister suggesting that the rapid fall in yen was a concern, so it’s taking a step back from recent rallies.

The UK Retail sales yesterday gave the pound a boost, breaking the 1.5700 level, but has struggled a few times to hold above this as the down trend keeps pressure on the rallies.  Today it looks to gain back above the level with the Public Sector net Borrowing PSNB data expected to be better for the pair at 6.9b- a drop from 11.1b. Currently trading below 1.5700.

The euro had a rangy day yesterday after starting the day on the back foot with weaker German and Euro Area PMI’s, piling the pressure on the ECB, only to turn around in the afternoon with the US CPI data disappointing.  Today’s move could come from Draghi speaking early this morning at  a European banking congress, with most of the issues already having been addressed by Draghi previously. Not sure we’ll get any more of an insight to the plans of the ECB, but a dovish tone will mostly be expected with the latest data pointing to a slowdown.  Currently trading below 1.2550.

The SNB hit the wires yesterday after the EUR/CHF reached a low of 1.2006, and said what we all know: that they are determined to defend the cap of 1.2000 and have unlimited FX reserves.  This sees a slight pop up in EUR/CHF to 1.2020 and sitting around there this morning, one to be very careful around, as by the comments of the SNB they are always watching.

EUR/USD

Supports 1.2500 1.2470 1.2430  | Resistance 1.2580 1.2610 1.2650

USD/JPY

Supports 117.60 117.00 116.40   | Resistance 118.90 119.50 120.15

GBP/USD

Supports 1.5640 1.5580 1.5530  | Resistance 1.5740 1.5790 1.5850