Market Drivers – US Session, September 12

It’s US CPI data’s day. The awaited readings are expected to trigger price actions across the board and are crucial before next week’s FOMC meeting. During the Asian session, Japan will release the Producer Price Index. Later, monthly UK GDP data is due, as well as Eurozone Industrial Production figures.

The US Dollar Index experienced a modest rise on Tuesday, approaching 105.00 before pulling back. It was a relatively quiet session as market participants awaited key US data.

The most crucial report of the day and the week is set to be released on Wednesday the August US Consumer Price Index (CPI). The annual rate is expected to rebound from 3.2% to 3.6%, while the Core rate is projected to slow down from 4.7% to 4.3%. Volatility is anticipated as these figures will influence expectations regarding the Federal Reserve’s monetary policy. More inflation data is scheduled for Thursday with the the Producer Price Index (PPI).

Economic Data

UK labour market data came in mixed, indicating a worsening economic situation. The Unemployment Rate edged higher to 4.3% (the highest since September 2021) after a decrease in employment by 207K. Average hourly weekly earnings rose 8.5% compared to the previous year, exceeding market consensus of 8.2%. Following these numbers, the Pound weakened. On Wednesday, the UK will report July GDP, Industrial Production, and trade data.

Key Developments

GBP/USD approached the monthly low but then rebounded towards 1.2500. The bias remains on the downside, holding above the 200-day Simple Moving Average (SMA) at 1.2440.

EUR/USD reached a weekly high at 1.0769 and then retraced, resuming the upside movement during the American session, rising towards 1.0750. The pair faces resistance at 1.0770 while holding above 1.0700. Eurozone Industrial Production data is due on Wednesday, and the European Central Bank will have its Governing Council meeting on Thursday.

The Japanese yen was among the worst performers. USD/JPY rose above 147.00 and encountered resistance at 147.20. Japan will release the August Producer Price Index (PPI) expected at 3.3% YoY.

NZD/USD managed to recover the 0.5900 mark with limited price action. The rebound from monthly lows remains cautious. In New Zealand, the August food price inflation is due on Wednesday.

AUD/USD pulled back after surging on Monday but held above 0.6400. Australia will report employment data on Thursday.

The Canadian Dollar outperformed the NZD and the AUD, supported by the rally in crude oil prices. The WTI barrel broke above $88.00 and then $89.00, reaching fresh monthly highs. USD/CAD dropped to the lower levels in almost two weeks and stabilized around 1.3550.

Precious metals had mixed performance, with Silver recovering to $23.00, ending the day flat, while Gold tumbled to the lowest level in two weeks at $1,907, even as US yields remained relatively steady.

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