Australian CPI data will be a major measure of the economy’s strength and a pivotal indication towards the RBA’s upcoming actions as a potential rate cut looms. Strong numbers above the forecasted 0.5% will reduce the chance of a rate cut before the end of the year likely to strengthen the currency. Data below 0.3% will likely see a rate cut whereas inflation of 0.4% will put pressure on new governor Lowe. Surging commodity prices, including a 5% boost in iron ore, saw the Australian Dollar rise 0.45% vs USD as the best performing currency opening up the likelihood of a sharper downside shock if CPI is weak. Larger oil inventories saw a 2% decrease in Oil meaning Aussie rose 1% vs CAD.
GBP/USD opened down 0.4% amid the volatility surrounding BoE governor Carney’s future
EUR/USD fell both throughout the London and American session taking prices down to the stubborn support of 1.0850 from the 1.0900 range. The last three days have seen continued tests of 1.0850 as the 10DMA at 1.0945 suggests downtrend could be finished. On top of that more evidence of Deutsche Bank struggles are sure to put downward pressure on the DAX.
