Markets snoozing ahead of US inflation data

Tuesday was largely devoid of tier one data, hence the snoring you could probably hear emanating from dealing rooms around the globe. Exchange rates are traded in tight ranges as the markets get ready for the fireworks of the next few days. It started with weaker-than-expected Chinese inflation data overnight. Consumer price inflation headlined at 2.7%, down from the previous month but the producer price index was a big surprise. That fell from 6.1% previously to just 4.2%. Asian markets were a little perplexed by that but it caused no more than a smattering of volatility. We will see more activity this afternoon when US inflation is announced at 12.30 GMT. There is every likelihood the headline level of annual consumer inflation will trickle lower to 8.7% and it is equally likely that, when you strip out the food and energy volatility, the core inflation level will be up a little. So, the Federal Reserve has a dilemma in its hands. Speculation over how they will handle the latest data is the key to the US dollar’s path later in the day. GBPUSD starts the day around $1.2085 and the EURUSD rate is $1.2160.

Sterling slips ahead of Friday’s GDP data

There is very little direction in the pattern of Sterling’s trading in the last 48 hours. That is to be expected when we lack UK data right up until 06.00 GMT Friday morning when Britain’s gross domestic product data will be released. The Pound is down to EUR 1.1830; marginally below yesterday’s levels and it is holding its own elsewhere; USD 1.2080, AUD 1.7360, and NZD 1.9210 to name but a few. We are unlikely to see any major movement in this pair today due to the lack of UK data but, as the Boy Scouts say, be prepared. 

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