Should we be wary of the pound's upward momentum amid its volatile price movements?
14.10.2022
- Remarks by Federal Reserve Governor Cook
- France: Consumer Price Index
Yesterday, the U.S. dollar emerged as the strongest currency during U.S. trading hours after the CPI came in at 8.2%, 0.1 percentage points higher than the market forecast of 8.1%. However, as U.S. Treasury yields declined, the dollar faced resistance and lost momentum. Although the EUR/USD pair fell immediately after the CPI release, it subsequently rose to 0.9806.EUR/USD had been trading in a range centered around 0.9700, but yesterday’s rally pushed it higher. We will be watching closely to see if it can hold the level around 0.9793.
Among European currencies, the pound has been on an upward trend, with GBP/JPY rising by just under 5 yen from 162.341 to 167.2880. Technical analysis has become less effective for GBP/JPY due to the major tax cut plan under the new Truss administration, and the pair has been trading within a 7-yen range on a daily basis. Given the extremely volatile price movements, we should be wary of sharp fluctuations heading into the weekend.
Today, at 3:45 PM, France’s Consumer Price Index; at 4:00 PM, Turkey’s Home Sales; at 6:00 PM, the Eurozone’s Trade Balance; at 9:30 PM, U.S. Retail Sales, U.S. Import Price Index, Canada’s Manufacturing Shipments, and Canada’s Wholesale Sales;at 10:00 PM, Canadian existing home sales; at 11:00 PM, the U.S. University of Michigan Consumer Sentiment Index, U.S. business inventories, and remarks by George, President of the Kansas City Fed; at 11:30 PM, remarks by Cook, Fed Governor; and at 1:15 AM, remarks by Waller, Fed Governor. We should remain cautious regarding the upward momentum of the pound, which is experiencing significant price volatility.
Author: Keisuke Sakurai
