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CPI Slips Further
The US Dollar is trading lower today on the back of yesterday’s July inflation data. Headline annualised CPI was seen cooling to 2.9%, below the prior and expected 3% reading the market was looking for. The data marks the first time since 2021 that CPI has been under the 3% level and has seen Fed easing expectations soaring. The market is now pricing in at least two cuts over the remainder of the year with traders now questioning whether the Fed will ease by .25% or .5% in September given the downward trend in inflation data. Traders will now be waiting for Fed chairman Powell’s comments at the Jackson Hole Symposium next week to add some colour ahead of the September FOMC.
US Retail Sales & Jobless Claims Next
Today, focus turns to the next incoming US data with July retail sales and weekly jobless claims both due this afternoon. For retail sales, the market is looking for the core reading to print 0.1%, down from 0.4% prior while the headline is expected to rise to 0.4% from 0% prior. Given yesterday’s softer inflation data, any downside surprise today should feed into a softer US Dollar, adding to overall bearish sentiment in the greenback. Jobless claims are expected to rise slightly to 236k from 233k prior which, if seen, should keep USD pressured through the end of the week.
Technical Views
DXY
The sell-off in DXY has stalled for now into a test of the 102.46 level with price underpinned also by the bullish trend line off last year’s lows. With momentum studies bearish, however, risks for a downside break are seen with 100.93 the next bear target should we move lower. To the topside, 104.05 remains the key level for bulls to get back above to alleviate near-term bearishness.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.