On Friday morning, the main currency pair is pretty neutral; investors are saving strengths in anticipation of another flow of statistics from the USA.
The EUR/USD pair is trading calmly on Friday morning. The current quote for the instrument is 1.1920.
Yesterday evening, the pair was rather volatile because of the US report on the Inflation Rate. In August, the CPI increased up to 0.4% m/m. On YoY, the indicator expanded up to 1.9%, which is very close to the Fed’s target of 2%.
The statistics turned out to be better than expected; in fact, in August the Inflation was the highest since the beginning of the year.
The EUR/USD pair got volatile right after the statistics had been published. At first, the USD rose, then it was corrected by the same numbers, and then fell a bit more. It was all about market expectations relating to future monetary moves of the Federal Reserve, specifically the key rate increase. There is a direct correlation: the higher the inflation, the more reasons for the rate increase. For the USD, it’s really good. But a bit later, investors came back down to earth, because they remembered that the Irma and Harvey consequences may be way too disastrous and the country’s infrastructure may require a lot of money from the budget for recovering. In this case, the Federal Reserve will have to postpone the rate increase.
There will be a lot of reports from the USA today as well. Late in the afternoon, they will publish the August reports on the Retail Sales and the Industrial Production. Apart from this, investors will see the preliminary report on the Consumer Sentiment from the University of Michigan. If the numbers are better than expected, they will provide the USD with support.
RoboForex Analytical Department