Inflation headlines the day ahead

August 31, 2018

There is plenty of data being published today as we head into the weekend.

The EUR/USD struggled overnight, weakening for most of the session. The pair opened at $1.17050 and began to slide early before a short-lived spike sent it to highs of $1.17174. The euro declined after that high, tumbling to lows of $1.16407 late in the session. It bounced off those lows, rallying to $1.16787 before again falling. It is currently at $1.16637. The GBP/USD remained rather flat for the entire session after opening at $1.30221 and hummed along, reaching a high of $1.30423. The pair dipped slightly, hitting lows of $1.29838 later in the session. It came off those lows, remaining flat for the rest of the day. It is currently trading at $1.30113.

The Dow tanked last night, on the back of new that Donald Trump may pull out of the World Trade Organisation as well as rejecting the removal of auto industry tariffs with the EU. The index opened at 26,142.51 and peaked at 26,157.14 during the first hour of trade. It basically headed south from point, sharply declining late in the session. The Dow eventually bottomed out at 25,933.68 very late in the session. It is not far off that low, currently trading at 25,954.60. The Dax tried its best to hold itself up overnight, eventually being dragged down by the Dow. The German index opened at 12,543.97 and peaked at 12,545.30 during the first hour of trade. There was a sharp decline that lead to the Dax hitting lows of 12,397.00 a couple of hours later. It quickly recovered, regaining most of those losses, rallying as high as 12,534.33. However, it could not hold onto those gains, closing at 12,455.00.

The day ahead is stacked with data releases, with the most significant being the European CPI & Core CPI Flash Estimates. Inflation is crucial for Europe as it is still suffering from anaemic growth. Given the very accommodative monetary policy settings, there’s not much else the ECB can do to kick-start inflation and growth within the European economy. Other data set for release today includes:

China – Manufacturing & Non-Manufacturing PMIs

Australia – Private Sector Credit, HIA New Home Sales

UK – Nationwide HPI

Canada – RMPI, IPPI

US – Chicago PMI, Revised UoM Consumer Sentiment & Inflation Expectations

Europe – French & Italian Prelim CPIs, German Retail Sales, Italian Monthly Unemployment Rate, European Unemployment Rate


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