Markets Consolidate, Dollar Remains Bid as PPI Beats Expectation

There was plenty of event risk across the markets yesterday but we didn’t see too much volatility in the currencies as they consolidated at recent levels. The dollar is still sitting to the top end of this weeks range but it feels like it need extra impetus to push it higher.

The Bank of England rate announcement passed without too much fluster as the vote count came in 7-1 as expected and comments were pretty much in line with market expectation. However the sterling was already on the back foot after much worse than expected manufacturing data earlier in the session, the market currently has the next rate hike by the MPC now fully priced in for Q4 2019.

In the US session we saw good results from the PPI data and unemployment numbers however these were tempered by continued concerns over recent political machinations and the fallout of Trump’s sacking of the FBI Director.

Looking ahead to today’s trading and it’s very quiet on the fundamental data release front in Asia with little to influence markets on the agenda, however, early on in the European session we have the German Prelim GDP data due. Into the New York session and things could get a little more interesting with the US CPI and Retail Sales data due, good results should see a continuation of dollar appreciation across the board.

As usual, traders will be keeping a close eye on the news wires, as well as the high potential for more market moving news out of Washington, we have the G7 meetings taking place this weekend and we could see some interesting comments emerging both during the course of today’s trading and over the weekend, so traders will be adjusting their strategies accordingly.

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