All trading involves risk. Ensure you understand those risks before trading.
Open account
☰
All trading involves risk. Ensure you understand those risks before trading.
Open account
✖

Super inflation Wednesday!

October 20, 2021 7:48 AM

The US released September inflation data last week, with headline CPI at 5.4% and Core Inflation at 4%.  In addition, US PPI was 8.6%, while the Core PPI was 6.8%.  China’s PPI was 10.7% as well.  All these prints were either the same or higher than August’s prints, with some at decade highs.  (Note that China’s inflation rate was only 0.7% vs 0.8% in August, mainly due to steep declines in pork prices, down 46.9%!).

What is inflation?

However, Wednesday is really inflation day.  Below is a list of inflation data for September that will be released on Wednesday:

  • Germany: PPI (12.7% YoY expected)
  • UK: CPI (3.2% YoY expected)
  • UK: Core CPI (3% YoY expected)
  • UK: PPI Output (6.8% YoY expected)
  • UK: PPI Input(11.6% YoY expected)
  • UK: Retail Price Index (4.7% YoY expected)
  • South Africa: CPI (5% YoY expected)
  • South Africa: Core CPI (3.1% YoY expected)
  • EU: CPI September (3.4% YoY expected)
  • EU: Core CPI September (1.9% YoY expected)
  • Canada: CPI (4.3% YoY expected)
  • Canada: Core CPI (3.6% YoY expected)
  • Russia: PPI (28.6% YoY expected)

Wednesday night US, Thursday morning Asia:

  • South Korea: PPI (7.3% YoY expected)

Note that the Euro Zone September print is a final reading. This print doesn’t usually change much from the Flash Print, which is released on the last day of the previous month.

As discussed in the Currency Pair of the Week, GBP/USD has been moving higher as the BOE has been commenting recently as to how concerned they are about rising inflation. Markets are even pricing in a 25bps rate hike at their November meeting, which is before their bond buying programs expires at the end of the year.  Inflation numbers on Wednesday may give a clue as which way the BOE will be leaning on November 4th! GBP/USD stalled at a high of 1.3833 on Tuesday, just below the 200 Day Moving Average at 1.3843.  A higher than expected inflation reading could catapult the pair towards 1.4000!

Source: Tradingview, Stone X

 

Trade GBP/USD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

The Canadian Core CPI excludes food and energy.  However, the Canadian Dollar tracks very closely with WTI Crude Oil.  Perhaps the headline print may be more appropriate to watch than the Core CPI for Canada.  The correlation coefficient between USD/CAD and WTI Crude Futures is -0.95, almost a perfect negative correlation between the 2 assets.  USD/CAD has only had a positive close on 3 of the last 14 trading days.  Price found support near the 61.8% Fibonacci retracement level from the June 1st lows to the August 20th highs, near 1.2366.  On Tuesday, the pair formed a hammer candlestick formation as price made a new trend low, down to 1.2311, and bounced. 1.2300 is the target for the head and shoulders pattern, therefore USD/CAD may have gotten “close enough” to target.  If the Canadian headline CPI print is weaker than expected, the pair may bounce towards 1.2415 resistance. The 200 Day Moving Average crosses above near 1.2500.  Support is at Tuesday’s lows 1.2311 and then the June 23rd lows, near 1.2254.

Source: Tradingview, Stone X

 

Trade USD/CAD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

With all that inflation data due out Wednesday, some currency pairs could get volatile, especially those currently close to support or resistance levels.  With the number of countries reporting inflation data on Wednesday, traders should get a better idea as to if inflation around the globe has plateaued or if it is still rising.

Learn more about forex trading opportunities.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

© City Index 2024