15 August 2024, EUR/USD
An event to look out for today:
15:30 GMT+3. USD - Change in retail trade volume
EURUSD:
EUR/USD made a brief rally on Wednesday, hitting a fresh seven-month peak before retracing back to 1.1000. After the EU gross domestic product (GDP) growth data was released exactly in line with expectations, the currency pair caught a spurt above 1.1000 and towards 1.1050. Meanwhile, EU industrial production remains limited and US Consumer Price Index (CPI) data met forecasts but still disappointed markets.
On Thursday, US retail sales are expected to rise to 0.3% in July after a 0.0% decline in the previous month. The end of the week will also see the release of the fresh University of Michigan Consumer Sentiment Index for August, which is expected to rise to 66.9 from 66.4.
US CPI inflation came in at 2.9% y/y in July, slightly below the forecast of 3.0%, while core CPI inflation eased to 3.2% y/y from the previous reading of 3.0%, as markets had expected. Monthly CPI, both core and core CPI, rose 0.2% m/m in July, but even this figure was rounded down from the reported 0.15% and 0.17% for core and core CPI respectively.
Despite the softening of inflation data at the consumer level, investors had hoped that the reading would come in even below forecasts after this week's US Producer Price Index (PPI) showed a sharper-than-expected decline in producer-level price pressures. However, the easing of price pressures does not appear to be being passed on to consumers on a one-to-one basis. According to CME's FedWatch tool, the betting markets are now pricing in only a 40% chance of a double rate cut by the Federal Reserve (Fed) on September 18, down from 50% earlier this week and 70% the week before.
Trading recommendation: Trade predominantly with Sell orders from the current price level
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