Kantox currency update: dollar dives ahead of U.S. CPI, Fed minutes
The dollar depreciated for the third consecutive day on Tuesday, with the disappointing U.S. non-farm payrolls report and the trade tensions with China weighing on the greenback.
The euro and the pound are rallying further, buoyed by an improved market sentiment, with the investors focusing on the U.S. Consumer Prices Index data and the minutes of the last Fed meeting for more insight into the bank’s dot plot.
EUR/USD on recovery, approaches 1.2400. The euro appreciated against the dollar to extend its recovery from Friday’s lows at 1.2215, towards levels near 1.2400. From a wider perspective however, it remains trapped within the last three months trading range, from 1.2200 to 1.2500 At London market opening times, the EUR/USD is trading at 1.2375.
GBP/USD: approaching key resistance around 1.4300. The pound has been following the EURUSD price action over the last days, bouncing up at 1.3970 area after the release of U.S. employment data on Friday, to regain 1.4200 level and approach resistance area between 1.4250 and 1.4350. At London market opening times, the GBP/USD is trading at 1.4210.
USD/JPY: limited below 107.50. The dollar has remained trading back and forth around 107.00, capped below 107.50 resistance area and with support at 106.60. At London market opening times, the USD/JPY is trading at 107.05.
In the Calendar Today
At 12:30 GMT we will be attentive to the U.S. Consumer prices Index. Inflation is expected to have accelerated with the Core CPI hitting the Fed 2% target, which might increase pressure on the Fed to accelerate its rate hike path and add buying pressure to the dollar.
At 19:00 GMT the main focus will be the release the minutes of the Federal Reserve’s March monetary policy meeting. With the market focused on the Fed’s rate hike path, any comments related to the monetary policy normalisation calendar might have a relevant impact on the dollar.
12:30 GMT U.S: Consumer prices Index (YoY) (Mar)
Previous: 1.8% Expected: 2.1%
19:00 GMT Fed: Minutes of the monetary policy meeting