Soft UK CPI sparks Sterling selloff

16 November, 2016

Sterling was exposed to downside pressures on Tuesday following the unexpected decline in October’s inflation figures which offered a fresh opportunity for bearish investors to send the GBPUSD lower. Consumer price growth in the UK receded back to 0.9% last month; falling short of the 1.1% expectations with smaller price hikes in clothing and university fees acting as the biggest drag. Although this instance of cooling inflation could alleviate some pressures enforced onto the Bank of England, Sterling weakness amid the Brexit woes may ensure UK inflation to continue its positive trajectory in the New Year. The pound remains haunted by the ongoing Brexit fears with the noticeable price vulnerability attracting sellers to drag the GBPUSD towards 1.2200.

Investors may direct their attention towards the Inflation report hearing where BoE Governor Mark Carney appears before Parliament’s Treasury Committee. Discussion revolving around the ongoing Brexit developments, inflation forecasts for the New Year, economic outlooks and Carney’s term in the office could inject the sensitive Sterling with additional levels of volatility.

US Retail sales in focus

The Greenback was a star performer across the currency markets on Monday as the combination of inflated US rate hike expectations and optimism over rising economic growth in the States under Trump’s administration enticed bullish investors to attack. Sentiment is firmly bullish towards the Dollar with the Dollar Index hovering around 11 month highs as speculators add bets over the Federal Reserve raising US interest rates in December. Much attention may be directed towards October’s retail sales figure which if exceeds expectations could play a key chess piece ahead of December’s Fed policy meeting. From a technical standpoint, Dollar bulls remain in full control with a breakout above 100.00 on the Dollar Index opening a path higher towards 100.50.

Commodity spotlight – Gold

Gold commenced the trading week on a shaky footing with prices tumbling towards $1210 as the mixture of Dollar strength and mounting US rate hike expectations soured investor attraction towards the zero yielding metal. The weekly close below $1250 sealed the deal for Gold bears with further declines expected in the future as the unexpected Trump effect encourages sellers to install repeated rounds of selling. With the Fed futures pointing to a 90% probability of a US interest rate increase in December, Gold is caged with any appreciations considered as a technical bounce for a steeper decline lower towards $1200. From a technical standpoint, the metal may be in the process of a technical bounce with the $1250 resistance attractive to sellers.


Source link  
Yen bulls jump on weak FED inflation

FOMC meeting minutes are always greeted warmly by the markets, as a glimpse of the potential future direction of the FED going forward...

S&P 500 hits record high

The US equity markets jumped sharply today on the back of positive economic data as US home sales m/m came in strongly at 5.48M (5.40M exp)...

European currencies dip on German politics

The Euro had a pause for concern in the evening trading session as the coalition talks in Germany fell apart leading to a political crisis in Germany.


Central bankers, Euro and UK GDP

Asian shares were depressed on Monday morning, as investors remained guarded amid lingering concerns over U.S. tax reforms. The caution from Asia...

US tax bill send equities soaring

The Tax bill has been talked about for some time, and today was the day for it. Obviously, it cleared the US house easily enough and is now...

Equity markets looking unhinged

It should be all good news for global equity markets at present as the global recovery continues to tick along nicely. So far profits are up and the market...


Steep equity correction is underway

2017 has seen many hedge fund and portfolio managers send warning signals that an equity market correction is overdue. Overstretched valuations...

RBNZ set for change on new mandate

The New Zealand government continues to be in the eye of traders as the current changes to the Reserve Bank of New Zealand look to be...

Brent touches a new 2-year high

Oil prices continued to march higher on both sides of the Atlantic early Monday. In the early trading hours, Brent reached a high of $62.44...

  


Share: