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Poor data weakens Yen

Currency Insights
Published: Friday 14 July 2017
  • Poor data weakens Yen
  • US inflation is key for USD
By David Johnson
It is Bastille Day in France or ‘La Fête Nationale’ as it is known locally. So have fun celebrating the storming and the removal of the Gentry. And whilst the French markets are closed for the celebrations, the rest of the world carries on as normal. For the European markets, there isn’t a lot of data to focus on. The trade balance numbers are unlikely to move the Euro and the smattering of inflation data from a few member states is likely to be to localised to have an impact.
Poor industrial production data from Japan overnight has seen the Yen weaken. A drop of 3.6% on the month to May is just an acceleration of the decline that has been going on for a while.  Capacity utilisation is also down.
The major news for today comes from the other side of the Atlantic.  Deep Breath – Retail Sales, Consumer Inflation, Capacity Utilisation, Industrial Production, Business Inventories, the University of Michigan Consumer Sentiment and a speech by Steven Kaplan of the Federal Reserve are all due this afternoon. Of these, the inflation rate is the most significant; largely due to the Federal Reserve’s lack of clarity on interest rates and Quantitative Easing. The forecasters believe the Consumer Price Index (CPI) will drop from 1.9% to 1.7% or thereabouts and that eases some of the pressure on the Federal Reserve to make more rate hikes – but it is only a matter of timing. Nonetheless, if inflation falls below 1.7%, the Dollar will weaken and the Pound’s valiant attempts to get above $1.30 might yield a result.  Inflation above 1.9% would have the opposite effect though, so whether you are a buyer or seller of USD, you may prefer the risk averse option of covering your risk before the slew of data releases at lunchtime (UK time).
And a house owner near the Silverstone racing circuit has taken advantage of timing to try to sell his property. With the British Grand Prix due to take place this weekend, the home owner is banking on those arriving by helicopter taking an interest in the £1.5 million pad. He has mown the words, ‘FOR SALE’ into the lawn. I love a bit of marketing.

Boating humour

My wife went on a sailing trip to Poole
In Dorset?
Yes, she said she would highly recommend it.
What does Captain Jack Sparrow use to cook?
Pyrex of the Caribbean!
Why did the boat sink when it was moored against the pontoon?
Pier pressure!  

Today's Major Economic Releases


Market BST Data/Event Previous Expected
EUR All Day EU: French Bank Holiday    
EUR 10:00 EU: Trade Balance 19.6b 20.3b
USD 13:30 US: Consumer Price Index  -0.1% 0.1%
USD 13:30 US: Core Consumer Price Index 0.1% 0.2%
USD 13:30 US: Retail Sales -0.3% 0.1%
USD 13:30 US: Core Retail Sales -0.3% 0.2%
USD 14:15 US: Industrial Production 0.0% 0.3%
USD 14:15 US: Capacity Utilization Rate 76.6% 76.7%
USD 14:30 Federal Open Market Committee Member Kaplan Speaks    
USD 15:00 US: Preliminary Univerisy of Michigan Consumer Sentiment 95.1 95.1
USD 15:00 US: Business Inventories -0.2% 0.3%

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