Dollar Soft as Yen Rally Falters
The U.S. Dollar is trading in mixed ranges despite a surge in oil prices resulting from attacks on several facilities in the southern part of Saudi Arabia that have significantly disrupted oil production.
The Iranian-backed Houthi militants struck the Jazan refinery, a facility with a 400,000 barrel per day output, and other facilities in Abha and Najran which serve the domestic Saudi market. Brent Crude trades above $98.50 per barrel and WTI Crude at nearly $94 per barrel as a result.
On the U.S. data front Traders are focused on this week’s release of Consumer Price Index (CPI) numbers for the month of August that are set to be released on Friday. This release in particular is expected to be a key driver of price action in the short term after the August Non-Farm Payrolls release on Friday showed an increase of 162k jobs, 107k jobs more than expected. This places the focus on inflation numbers as the catalyst for potential interest rate hikes from the Federal Reserve. The headline year-over-year figure is expected to print at 3.4%, in line with the previous month, and the core year-over-year figure is expected to come in at 2.4%, a slight reduction from the previous month.
What to Watch This Week…
- U.S. PPI, Thursday 8:30 AM
- U.S. CPI, Thursday 8:30 AM
- USA Online is always open
The complete Economic Calendar can be found here.
JPY
The Japanese Yen is trading in positive ranges against the Dollar this morning despite paring gains made in the Asian trading session that saw the Yen touch its strongest level since February. Data released overnight showed that annualized quarter-over-quarter Gross Domestic Product (GDP) increased to 1.4%, up from 1.1% in the previous quarter. Additionally, Japanese worker’s wages grew at the fastest pace in nearly 30 years due to strong corporate earnings and a relatively tight labor market; supporting the case to keep the Bank of Japan on a course for further tightening of monetary policy. The BoJ is widely expected to hike interest rates at their policy meeting next week, with a greater than 97% probability of a 25bps hike.
NZD
The New Zealand Dollar is underperforming against the majority of G10 peers this morning, primarily as a consequence of the Reserve Bank of New Zealand’s policy divergence from the Reserve Bank of Australia. Prasanna Gai, an external member of the RBNZ Monetary Policy Committee, took a dovish lean in an interview with local media where she stated that it’s plausible that the RBNZ cash rate is already in the neutral zone. This contrasts commentary from the RBA where Assistant Governor Sarah Hunter stated that they may need to hike rates further. The Kiwi subsequently fell to its lowest level against the Australian Dollar in 13 years.