Overnight, USD rallied against all currencies thereby putting more downward pressure on commodities across the board. Eurusd dropped below yesterday’s low now trading below 1.0674 as at 07:00UK, USDCHF also pushing above 1.010 now trading at 1.0120. USDJPY continues to rally above 122, now trading at 123.40. GPUSD has also dropped to 1.5165. Gold price is currently testing $1077 support level holding since last week Friday. A break of this support level will take price to $1000. Commodity currencies are also sliding to the downside due to fall in major commodity prices especially gold and copper. NZDUSD broke a strong Fibonacci level of 61.8% at 0.6488. This is another confirmation of more downside also considering the strength of USD. In the same pattern, AUSUSD price also dip to the downside on expectation of further monetary intervention from the Royal Bank of Australia.
Inflation data is what market will be watching closely from the UK and United states economy later today. UK inflation figure will be coming out around 09:30UK. Market is expecting inflation figure to remain low at -0.1% (YoY) and 0.1% (MoM). Later in the US around 13:30UK market will be expecting inflation figure of around 0.2% (MoM) and 1.9% (YoY). Industrial production data is also expected from the US economy at around 0.1%. Inflation data are very important data to watch today because it gives more insights into when the FED reserve and Bank of England are likely to raise rates. It will be recalled that both central banks highlighted the risk of low inflation outlook at raising rates. Both central banks are targeting 2% inflation.
Strong inflation figures will strengthen either currencies and further confirms a rate hike soon. A disappointing figure might extend the timing of rate hike.