Daily Plan US CPI

UK Inflation and BOE Interest Rate Decision focus – Strategy

Strategy Overnight… Global Stock indexes all close higher. China GDP outlook upgraded. Soft Brexit talks being voiced by insiders. Calendar Data of interest: UK Data focus Unemployment Rate expected 4.6, previous 4.6 Average Earnings expected at 2.3%, previous 2.4% European focus Industrial Production exp 0.5%, previous -0.1% US data focus Core CPI Core Retail Sales […]

Strategy


Overnight…

  • Miss on US Data, miss on retail sales and Inflation.
  • Fed raises interest rates by 25 basis points to 1.25% from 1%.
  • Fed look to start unwinding of its balance sheets (slightly hawkish tone)
  • Dollar regains all losses after weak CPI and Inflation Data post rate hike and Yellen commentary.
  • Miss on UK data yesterday with average hourly earnings falling from 2.3% to 2.1% missing expectations of 2.4%.
  • Oil miss of expectations narrower than expected draw of down -1.661mil and rising US gasoline stockpiles with WTI trading below $45 per barrel and Brent trading under 47.
  • UK switching from hard talk to soft talk on Brexit.

Calendar

FireShot Capture 10 - Economic Calendar - https___tradingeconomics.com_calendar.png

Data of interest:

  • UK Data focus
    • 09:30 Retail sales – forecast -0.8% consensus -0.8% previous 2%
    • 12:00 BOE Quantitative Easing – forecast 435B previous 435B
    • 12:00 Interest Rate Decision – forecast 0.25% previous 0.25%
  • US data focus
    • 13:30 Initial Jobless claims – exp 242K prev 245K
    • NY Empire State Manufacturing index – exp 4.00 prev -1.00
    • 13:30 Philadelphia Fed Manufacturing Index – exp 24.0 prev 38.8

Trades

Cable 

Based on the last sessions miss on the UK data with average hourly earnings missing expected by .2% showing a increasing gap between wage growth and inflation putting pressure on consumers and future retail sales. I strongly believe that BOE will not raise interest rates today and keep current QE in place for the foreseeable future. We have retail sales due out at 09:30 and with the negative view on sterling on yesterdays data and overall political risks could see additional selling against the slightly hawkish dollar after the FOMC meeting yesterday.

Brexit stance maybe changing to a soft which could shift the view of Sterling from negative to positive, will have to watch this space.

In terms of data, anything negative below 0 for retail sales may see a continued devaluation of the pound.

CableShort1

 

 

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