Forex Today: Investors hope for US inflation data to wake markets up


content provided with permission by FXStreet

Here
is
what
you
need
to
know
on
Thursday,
July
11:

The
action
in
foreign
exchange
markets
remain
subdued
in
the
second
half
of
the
week
following

Federal
Reserve

Chairman
Jerome
Powell’s
two-day
Congressional
testimony.
Thursday’s

economic
calendar

will
feature
the
US
Consumer
Price
Index
(CPI)
data
for
June,
which
have
the
potential
to
ramp
up
the
volatility.
Weekly
Initial
Jobless
Claims
from
the
US
will
also
be
watched
closely
by
participants.

US
Dollar
PRICE
This
week

The
table
below
shows
the
percentage
change
of
US
Dollar
(USD)
against
listed
major
currencies
this
week.
US
Dollar
was
the
weakest
against
the
British
Pound.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.00% -0.40% 0.57% -0.10% -0.10% 0.74% 0.33%
EUR -0.00%   -0.20% 0.91% 0.22% 0.07% 1.08% 0.66%
GBP 0.40% 0.20%   1.06% 0.44% 0.27% 1.29% 0.86%
JPY -0.57% -0.91% -1.06%   -0.65% -0.63% 0.34% -0.19%
CAD 0.10% -0.22% -0.44% 0.65%   -0.03% 0.84% 0.44%
AUD 0.10% -0.07% -0.27% 0.63% 0.03%   1.01% 0.60%
NZD -0.74% -1.08% -1.29% -0.34% -0.84% -1.01%   -0.41%
CHF -0.33% -0.66% -0.86% 0.19% -0.44% -0.60% 0.41%  

The
heat
map
shows
percentage
changes
of
major
currencies
against
each
other.
The
base
currency
is
picked
from
the
left
column,
while
the
quote
currency
is
picked
from
the
top
row.
For
example,
if
you
pick
the
US
Dollar
from
the
left
column
and
move
along
the
horizontal
line
to
the
Japanese
Yen,
the
percentage
change
displayed
in
the
box
will
represent
USD
(base)/JPY
(quote).

Fed
Chairman
Powell
repeated
his
prepared
statement
before
the
US
House
Financial
Services
Committee
on
Wednesday
and
refrained
from
delivering
any
fresh
clues
regarding
the
timing
of
the
interest
rate
reduction.
Nevertheless,
Wall
Street’s
main
indexes
registered
strong
gains
midweek
and
made
it
difficult
for
the

US
Dollar

(USD)
to
gather
strength
against
its
major
rivals.
After
posting
small
losses
on
Wednesday,
the
USD
Index
holds
steady
at
around
105.00
early
Thursday.
On
a
yearly
basis,
the
CPI
is
forecast
to
rise
3.1%,
while
the
core

CPI

is
seen
increasing
3.4%.

Economic
Indicator

Consumer
Price
Index
ex
Food
&
Energy
(YoY)

Inflationary
or
deflationary
tendencies
are
measured
by
periodically
summing
the
prices
of
a
basket
of
representative
goods
and
services
and
presenting
the
data
as
the
Consumer
Price
Index
(CPI).
CPI
data
is
compiled
on
a
monthly
basis
and
released
by
the

US
Department
of
Labor
Statistics
.
The
YoY
reading
compares
the
prices
of
goods
in
the
reference
month
to
the
same
month
a
year
earlier.
The
CPI
Ex
Food
&
Energy
excludes
the
so-called
more
volatile
food
and
energy
components
to
give
a
more
accurate
measurement
of
price
pressures.
Generally
speaking,
a
high
reading
is
bullish
for
the
US
Dollar
(USD),
while
a
low
reading
is
seen
as
bearish.



Read
more.

The
data
published
by
the
UK’s
Office
for
National
Statistics
showed
in
the
European
Morning
that
the
Gross
Domestic
Product
expanded
by
0.4%
on
a
monthly
basis
in
May.
This
reading
came
in
better
than
the
market
expectation
for
an
expansion
of
0.2%.
After
closing
in
positive
territory
on
Wednesday,


GBP/USD

continues
to
push
higher
and
was
last
seen
trading
at
its
strongest
level
since
early
March
above
1.2850.


EUR/USD

benefited
from
the
modest
selling
pressure
surrounding
the
USD
late
Wednesday
and
closed
the
day
in
positive
territory.
The
pair
holds
its
ground
on
Thursday
and
edges
higher
toward
1.0850.

The
Melbourne
Institute
reported
in
the
Asian
session
that
the
Consumer
Inflation
Expectation
ticked
down
to
4.3%
in
July
from
4.4%.


AUD/USD

largely
ignored
this
data
and
the
pair
was
last
seen
trading
marginally
higher
on
the
day
slightly
above
0.6750.



USD/JPY

stays
in
a
consolidation
phase
above
161.50
after
closing
the
first
three
days
of
the
week
in
positive
territory.
The
data
from
Japan
showed
that
that
Machinery
Orders
declined
by
3.2%
on
a
monthly
basis
in
May.


Gold

rose
toward
$2,390
on
Wednesday
but
erased
a
large
portion
of
its
daily
gains
during
the
American
trading
hours.

XAU/USD

struggles
to
gather
bullish
momentum
but
sticks
to
modest
daily
gains
near
$2,380
in
the
early
European
session.

Inflation
FAQs

Inflation
measures
the
rise
in
the
price
of
a
representative
basket
of
goods
and
services.
Headline
inflation
is
usually
expressed
as
a
percentage
change
on
a
month-on-month
(MoM)
and
year-on-year
(YoY)
basis.
Core
inflation
excludes
more
volatile
elements
such
as
food
and
fuel
which
can
fluctuate
because
of
geopolitical
and
seasonal
factors.
Core
inflation
is
the
figure
economists
focus
on
and
is
the
level
targeted
by
central
banks,
which
are
mandated
to
keep
inflation
at
a
manageable
level,
usually
around
2%.

The
Consumer
Price
Index
(CPI)
measures
the
change
in
prices
of
a
basket
of
goods
and
services
over
a
period
of
time.
It
is
usually
expressed
as
a
percentage
change
on
a
month-on-month
(MoM)
and
year-on-year
(YoY)
basis.
Core
CPI
is
the
figure
targeted
by
central
banks
as
it
excludes
volatile
food
and
fuel
inputs.
When
Core
CPI
rises
above
2%
it
usually
results
in
higher
interest
rates
and
vice
versa
when
it
falls
below
2%.
Since
higher
interest
rates
are
positive
for
a
currency,
higher
inflation
usually
results
in
a
stronger
currency.
The
opposite
is
true
when
inflation
falls.

Although
it
may
seem
counter-intuitive,
high
inflation
in
a
country
pushes
up
the
value
of
its
currency
and
vice
versa
for
lower
inflation.
This
is
because
the
central
bank
will
normally
raise
interest
rates
to
combat
the
higher
inflation,
which
attract
more
global
capital
inflows
from
investors
looking
for
a
lucrative
place
to
park
their
money.

Formerly,
Gold
was
the
asset
investors
turned
to
in
times
of
high
inflation
because
it
preserved
its
value,
and
whilst
investors
will
often
still
buy
Gold
for
its
safe-haven
properties
in
times
of
extreme
market
turmoil,
this
is
not
the
case
most
of
the
time.
This
is
because
when
inflation
is
high,
central
banks
will
put
up
interest
rates
to
combat
it.
Higher
interest
rates
are
negative
for
Gold
because
they
increase
the
opportunity-cost
of
holding
Gold
vis-a-vis
an
interest-bearing
asset
or
placing
the
money
in
a
cash
deposit
account.
On
the
flipside,
lower
inflation
tends
to
be
positive
for
Gold
as
it
brings
interest
rates
down,
making
the
bright
metal
a
more
viable
investment
alternative.