UK Inflation Rises, Putting BoE Rate Path in Focus
Markets are digesting key UK inflation data and the RBNZ’s rate decision, while anticipation builds for the FOMC minutes later today. The British pound is under pressure after mixed inflation data, while the New Zealand dollar is steady following the RBNZ’s rate hold. Oil prices are climbing, and gold remains firm despite a slight pullback.
Key Data Out Today
- Australia: Wage Price Index fell short, coming in at 0.7% QoQ, below the expected 0.8%, suggesting softer wage growth.
- New Zealand: RBNZ held rates at 3.75%, keeping a cautious stance amid inflation risks.
- United Kingdom:
- CPI (YoY) rose to 3%, beating expectations of 2.8%, while Core CPI held steady at 3.7%.
- PPI Output (YoY) ticked up to 1.5%, suggesting price pressures remain.
- Retail Price Index (YoY) came in hot at 3.6%, higher than the expected 3.7%.
- United States:
- Building Permits came in at 1.46M, slightly below the forecast.
- Housing Starts declined to 1.4M, missing estimates.
Commodities
- Crude oil continues to climb, with Brent at $76.10 per barrel (+0.39%) and WTI at $72.13 (+0.42%), supported by optimism around global demand.
- Gold is steady at $2,931 per ounce, slightly lower by 0.07%, as investors await the Fed minutes.
- Silver dipped 0.32% to $32.78, but remains in a broader uptrend.
Currency Movements
EUR/USD (1.0457, +0.11%)
The euro is slightly higher, supported by stronger-than-expected German ZEW sentiment. However, gains are limited, as markets remain cautious ahead of the FOMC minutes.
GBP/USD (1.2621, -0.07%)
The pound is under pressure, as hotter-than-expected UK inflation raises concerns over BoE policy decisions. Investors are wary of a potential prolonged rate hold, keeping GBP gains capped.
AUD/USD (0.6366, +0.20%)
The Aussie dollar is modestly higher, helped by rising commodity prices, though weaker Australian wage data is limiting upside momentum.
NZD/USD (0.5726, +0.48%)
The Kiwi has gained, despite the RBNZ holding rates at 3.75%. Markets believe the central bank is still concerned about inflation, providing some upside support to NZD.
USD/JPY (151.59, -0.31%)
The yen is strengthening, driven by a dip in US Treasury yields and market caution ahead of the FOMC minutes. However, downside risks remain if Fed signals a hawkish bias.
USD/CNY (7.2839, +0.11%)
The yuan is slightly weaker, reflecting ongoing concerns over China’s economic growth. Investors are awaiting further stimulus signals from Chinese policymakers.
USD/CHF (0.9026, -0.07%)
The Swiss franc is gaining modestly, as safe-haven demand picks up ahead of US Fed minutes.
USD/CAD (1.4179, -0.14%)
The Canadian dollar is strengthening, as oil prices climb, supporting CAD gains. However, cautious risk sentiment is keeping further upside in check.
USD/MXN (20.25, -0.01%)
The peso remains stable, with limited movement as traders assess emerging market demand and US economic data.
USD/INR (86.85, -0.06%)
The rupee is gaining slightly, tracking a weaker USD and improved risk appetite in Asia. However, demand for US dollars from importers is limiting gains.
Market Outlook
- GBP traders will watch BoE officials’ remarks closely following the higher-than-expected inflation figures.
- The US FOMC minutes later today will be the main focus, with investors looking for rate guidance.
- Oil prices are gaining as market sentiment around China’s demand recovery remains positive.
- NZD traders will assess whether the RBNZ’s neutral stance could shift in the coming months.