Kantox currency update: dollar drops as US inflation slows down
The US dollar retreated further on Thursday, weighed by a larger than expected slowdown on the US Consumer Price Index and a somewhat brighter market sentiment, as fears about global trade tensions eased.
The British pound has climbed to fresh to six-week highs, boosted by reports that the EU and UK have reached an initial agreement on the Irish Border issue, which would open the way for a post-Brexit partnership deal.
EUR/USD: fresh two-week highs above 1.1700. The euro accelerated its recovery after breaking the upper limit of the last two weeks trading range, at 1.1650/60, and returns to levels past 1.1700, fuelled by US dollar weakness after the release of the US CPI reading. As at London market opening times, the EUR/USD is trading at 1.1705.
GBP/USD rally extends beyond 1.3100. The pound appreciated for the fourth consecutive day on Thursday, boosted by news of progress on the UK-EU Brexit negotiations, and has completely retraced August’s sell-off, returning to levels above 1.3100. As at London market opening times, the GBP/USD is trading at 1.3105.
USD/JPY advances to six-week highs at 112.00. The dollar eased on Thursday after the release of US CPI data but it found support shortly afterwards to regain losses and rallied to 112.00 area, with the safe-haven yen on the defensive amid higher risk appetite. As at London market opening times, the USD/JPY is trading at 111.85.
In the Calendar Today
Today in the UK BoE Governor Mark Carney’s speech will be observed with special interest. With the market wary about the perspective of a no-deal Brexit, Carney’s comments might have a significant impact on the pound.
In the US the US Retail Sales figures are expected to have increased for the sixth consecutive month in August. This would confirm that US economy remains buoyant in the third quarter which might increase buying pressure on the dollar.
10:00 GMT BoE: Carney’s speech
12:30 GMT US: Retail Sales (MoM) (Aug)
Previous: 0.5% Expected: 0.4%