Morning FX desk — Monday 14 Sep
Dollar The dollar index is near 99.28 in early Asia, a little firmer than Friday’s close around 99.12.
Friday’s US inflation report was the main driver into the weekend. Headline inflation held at 3.4 percent, as expected. The core figure on the month came in at 0.3 percent, above the 0.2 percent expected. That lifted the chance of a Fed rate rise on Wednesday to around 90 percent. The dollar jumped on the number, then gave most of that back by the New York close.
This week is heavy: Canada inflation today, Fed on Wednesday, Bank of England on Thursday, Bank of Japan on Friday.
USD (dollar index) Last: ~99.28 (Yahoo, Asia). Friday close: ~99.12. Mon high / low so far: 99.28 / 99.07. Last week: ~99.37 / ~98.60. What happened: Core US inflation came in higher than expected. That can push the Fed toward raising rates this week. A rise would tend to support the dollar. A hold would tend to weigh on it. What’s next: Fed decision and press conference Wednesday. US retail sales also Wednesday.
EUR/USD Last: 1.1581. Friday close: 1.1597. Mon high / low: 1.1604 / 1.1581. Last week: ~1.1654 / ~1.1572. What happened: A little softer than Friday. The ECB raised rates by a quarter-point last Thursday to 2.50 percent. Eurozone inflation in August was 3.3 percent. Energy prices remain the pressure. A firmer dollar after US inflation weighed on the euro Friday and into Asia. What’s next: Eurozone inflation (final) Thursday. Fed Wednesday is still the main event for this pair.
GBP/USD Last: 1.3509. Friday close: 1.3527. Mon high / low: 1.3529 / 1.3509. Last week: ~1.3570 / ~1.3485. What happened: Slightly softer than Friday. UK GDP for July rose 0.4 percent on the month versus flat expected. A stronger economy can keep the Bank of England leaning toward higher rates later, even if Thursday is still seen as a hold. What’s next: UK jobs Tuesday. UK inflation Wednesday. Bank of England Thursday (hold at 3.75 percent widely expected).
AUD/USD Last: 0.7155. Friday close: 0.7171. Mon high / low: 0.7173 / 0.7144. Last week: ~0.7239 / ~0.7151. What happened: Softer into Asia. No major Australian data overnight. The pair is moving with the dollar into a Fed week. No RBA decision this week. What’s next: Chinese activity data Tuesday (often moves the Aussie). Fed Wednesday.
USD/JPY Last: ~154.09. Friday close: 153.49. Mon high / low: 154.11 / 153.35. Last week: ~154.62 / ~152.90. What happened: The dollar is firmer versus the yen than Friday. Friday the yen strengthened on the day even as US inflation lifted the chance of a Fed rise, with markets also pricing a Bank of Japan rate rise this week. Asia has given some of that yen strength back. What’s next: Bank of Japan Friday (markets largely price a quarter-point rise toward 1.25 percent). Japanese inflation Friday. Trade balance Wednesday.
USD/CAD Last: ~1.3873. Friday close: 1.3872. Mon high / low: 1.3874 / 1.3853. Last week: ~1.3883 / ~1.3760. What happened: Roughly flat versus Friday. Quiet overnight ahead of today’s Canada inflation release. What’s next: Canada August inflation today (around 3.0 to 3.1 percent expected; last month 3.0 percent). Higher than expected can push the Bank of Canada toward raising rates later and support the Canadian dollar (USD/CAD lower). Softer than expected can do the opposite. Bank of Canada minutes Wednesday.
USD/MXN Last: ~16.98. Banxico Friday fix: 16.9705. Mon high / low: ~17.00 / ~16.94. Last week: ~17.01 / ~16.87. What happened: Little change versus Friday. The peso held under 17 into the weekend. What’s next: No Banxico decision this week. Main knock-on is the Fed on Wednesday.
Week ahead Mon: Canada inflation. Tue: UK jobs. China activity. Wed: Fed. US retail sales. UK inflation. Thu: Bank of England. Eurozone inflation (final). Fri: Bank of Japan. Japanese inflation. UK retail sales.
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Rates are indicative mid-market levels for information only and are not investment advice.