DAILY FX WRAP: EUR sags as ECB minutes show unease over appreciation, choppy USD following Gary Cohn rumours

USD: Choppy price action for the greenback throughout the day with the USD initially pressured during the European morning as participants reacted to the somewhat dovish FOMC meeting minutes, however losses had later been pared. The release showed that voting members were cautious over the slowdown in inflation suggesting that it may not only be transitory. Later in the day, social media reports suggested that Trump’s administration had been further dismantled with rumours of Gary Cohn’s resignation, consequently pressuring the USD-index, although denial led to a slight reversal.

EUR: The ECB minutes provided the first signs of unease over the ascension in EUR, which has risen 3.5% since June and is 2.5% away from the 2014 peak (where Draghi said at the time that the EUR was a factor weighing on inflation) on a trade weighted basis. The minutes stated that the council expressed concerns about possible market overshooting regarding the currency. In turn, this led to EUR/USD briefly breaking below 1.17 to move down to the 1.1650 support zone. Elsewhere, final inflation figures confirmed core CPI edged higher, while headline inflation had been unrevised.

GBP was once again a key focus for FX markets amid further tier 1 data from the region, this time with retail sales on the data slate. Upon the release, GBP/USD saw a spike higher after ¾ headline metrics exceeded expectations before prices were dragged lower to pre-announced levels with all 4 components revised lower.

17 Aug 2017 - 16:03- Research Sheet- Source: RANsquawk

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