INTERNATIONAL CURRENCY BUZZ
Forex – U.S. Dollar Falls on Disappointing PPI Data
Forex – Sterling down on report of potential leadership challenge to UK’s May
Forex – EUR/USD regains traction and tests 1.1600 post-US PPI
Spot bounced to the boundaries of the critical 1.1600 handle after US headline Producer Prices surprised markets to the downside in August, contracting for the first time after 18 months at a monthly 0.1% and expanding 2.8% on a yearly basis. In addition, Core Producer Prices dropped 0.1% inter-month and gained 2.3% over the last twelve months, both prints coming in below expectations. In the meantime, the lack of a clear direction and absence of relevant catalysts today keep motivating spot to extend the multi-day sideline theme, while cautiousness among traders is seen growing bigger in light of the upcoming ECB meeting (Thursday). EUR/USD keeps the familiar range so far on Wednesday, navigating the boundaries of the 1.1600 handle in the wake of the release of August’s US Producer Prices. At the moment, the pair is losing 0.12% at 1.1592 and a break below 1.1508 (low May 29) would target 1.1449 (50% Fibo of the 2017-2018 up move) and finally 1.1299 (2018 low Aug.15).
Sterling fell on Wednesday after reports of a potential leadership challenge to Prime Minister Theresa May and as realism set in about how far there remains to go before Britain can agree a Brexit trade deal. The pound fell a quarter of a percent to as low as $1.2994 against the dollar after the BBC reported a group of about 50 lawmakers in May’s government had met to discuss how and when they could force her out of her job. These lawmakers have condemned May’s plans for Britain to remain in a free trade zone for goods with the EU after it leaves the bloc in March, 2019. The pound later recovered to trade flat at $1.3028, while against the euro the British currency was largely unmoved, at 89.010 pence per euro (EURGBP=D3). In choppy trading in recent days, sterling had hit five-week highs of $1.3087 on renewed hopes of a speedy Brexit deal with Brussels.