FX Daily Wrap: Dollar undermined by soft CPI core and fall in weekly wages

USD

The Greenback is under pressure across the board just ahead of the Fed, with the Index back below 94.000 largely on the back of weaker than forecast core inflation and an unexpected decline in weekly earnings. Sentiment also soured by the Republican loss of Alibama and its narrower Senate majority as a result, which could make it harder to get Trump’s tax reforms through. On that note, the President is due to address the proposals not long after the FOMC rate (hike) verdict, SEP, dot plots and Yellen news conference. For the DXY, a further retreat towards 93.500 or rebound targeting 94.500 looks contingent on the aforementioned events.

AUD/NZD

The Kiwi has regained bragging rights down under, but not quite the next big figure vs the Usd at 0.7000 given some major technical resistance adding to psychological and fundamental factors keeping Nzd bulls at bay. However, Aud/Usd has breached 0.7600, boosted by rising commodity prices, but stalling some way short of the recent 0.7650+ high.

GBP

The next best G10 performer, as Cable recovered from the low 1.3300s towards 1.3400 and Eur/Gbp slipped back below 0.8800 despite mixed UK jobs/wage data and awaiting the UK parliamentary vote on MPs right to veto the Brexit bill.

EUR/JPY

Both still largely contained vs the Usd, although Usd/Jpy briefly fell below 113.00 on the US data before trading back around the round number where a modest size option expiry sat. Eur/Usd ranged from 1.1730-70 approximately, so did not really threaten large strikes at 1.1700 or 1.1800, but a 1.1750 expiry in 1 bn would have come close to being exercised.

13 Dec 2017 - 15:30- Forex- Source: ransquawk

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