FX Markets Tracking Global Equities, US Dollar Awaits CPI & Retail Sales

Talking Points:

– Liquidity conditions continue to normalize as a calendar turns into a initial full trade week of 2018; MiFID II adoption competence be holding behind trade volumes, however.

– There are usually 4 ‘high’ significance information releases on a calendar this week, dual from any China and a United States.

Retail merchant positioning is indicating to serve severe days forward for a US Dollar as trade gets underneath approach in 2018.

Join me on Mondays during 7:30 EST/12:30 GMT for a FX Week Ahead webinar, where we plead tip eventuality risk over a entrance days and strategies for trade FX markets around a events listed below.

01/10 Wednesday | 01:30 GMT | CNY Chinese Consumer Price Index (DEC)

Chinese consumer prices rose by +1.7% y/y in November, stability a inter-year miscarry after environment a two-year low in acceleration in Feb (+0.8%). The Dec reading is due to uncover serve improvement, adult to +1.9% y/y. Nevertheless, cost pressures sojourn pale relations to a start of 2017, when CPI was +2.5% y/y in January. Thanks to stabilizing bottom steel prices, a Producer Price Index – a cost of inputs during a bureau gate, if we will – is due in during +4.8% from +5.8% y/y. Slowly improving acceleration readings out of China could filter by and impact a Australian and New Zealand Dollars underneath a guise that larger direct and ‘hotter’ mercantile activity from China will assistance with a dual antipodean currencies conclude – view that has clearly grown over a past 4 weeks given a pointy miscarry in commodity prices and a indirect pickup in AUD- and NZD-cross rates.

Pairs to Watch: AUD/JPY, AUD/USD, NZD/JPY, NZD/USD, USD/CNH

01/12 Friday | 13:30 GMT | USD Advance Retail Sales Consumer Price Index (DEC)

Consumption is a many critical partial of a US economy, generating approximately 70% of a title GDP figure. The best monthly discernment we have into expenditure trends in a US competence arguably be a Advance Retail Sales report. In December, according to a Bloomberg News survey, expenditure was due in during +0.4% from +0.8% m/m. The Retail Sales Control Group, a submit used to calculate GDP, is due in during +0.4% from +0.8% m/m as well. Currently, a Atlanta Fed GDPNow Q4’17 expansion foresee is +2.7%.

FX Markets Tracking Global Equities, US Dollar Awaits CPI amp; Retail Sales

According to a Bloomberg News survey, US consumer prices were marginally aloft on a monthly-basis in October, due in during +0.1% from +0.4% m/m and +2.1% from +2.2% y/y. The core readings should be similar, during +0.2% from +0.1% m/m, and during +1.7% unch y/y. These total advise some underlying disinflation continues to persist, melancholy to criticise a Fed’s designed trail for 3 hikes in 2018; a initial travel is being labelled in for Mar 2018.

Pairs to Watch: EUR/USD, USD/JPY, DXY Index, Gold

Read more: Euro’s Strong Fundamentals Drive Long Positioning Build Up during Start of 2018

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To hit Christopher, email him during cvecchio@dailyfx.com.

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