Balloon Crew

October 16, 2015

Balloon Crew:
With a 0.2% rise in September core US consumer prices, hope has been given that inflation is at least moving in the right direction toward the Fed’s 2% target.

“USD CPI m/m (-0.2% v -0.2% expected)”

“USD Core CPI m/m (0.2% v 0.1% expected)”

cpi

Low inflation has been a persistent headache for the Federal Reserve with a constant print below the much talked about 2% target. Alongside the always important employment readings, inflation has become the other major hurdle for the Fed to jump to begin ‘interest rate normalisation’ as they like to put it.

Either way, this reading is being seen to give the Fed at least 1 positive among a sea of recent negatives and the USD finally had its rot halted overnight.

EUR/USD Hourly:
eu10
Click on chart to see a larger view.

On the EUR/USD hourly above, we can see that 2 weeks of gains were halted on the CPI number. Price still has only pulled back to the shown short term trend line though, so be mindful that one last squeeze back to highs could be on again.

AUD/USD Hourly:
au14
Click on chart to see a larger view.

Commodity currencies on the other hand managed to buck the trend with the Aussie’s short positioning post employment data earlier causing traders to take profit and therefore rip higher.

———

On the Calendar Friday:

“Bank of Japan governor Haruhiko Kuroda Due to speak at the annual meeting of credit cooperatives, in Tokyo.”

NZD CPI q/q (0.3% v 0.2% expected)

JPY BOJ Gov Kuroda Speaks

CAD Manufacturing Sales m/m
USD Prelim UoM Consumer Sentiment

———-

Chart of the Day:
After printing 9 days without a single bearish candle and going on the pair’s longest bullish streak in 4 years, it all seems to have come undone for USD/CAD.

USD/CAD Daily:
uc7
Click on chart to see a larger view.

Price on the Loonie has now pulled back to re-test previous resistance now as possible support. It’s a very clean level and if momentum stalls, could offer a chance to fade against it.

Do you see opportunity trading the Canadian Dollar?

Dane Williams – @VantageFX

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