The dollar fell from 97.16 last Friday amid weak non-farm payroll data for May and data on average income. The US dollar index still remained stuck below 97 points. The US Consumer Price Index (CPI) was the highlight of Wednesday. Market participants were eagerly awaiting these important reports as the result would strengthen the chances of the the Federal Reserve cutting interest rates.
Market analysts expected the May year-on-year CPI which excludes food and energy to remain in line with the previous 2.1%. However, data came in 0.1% lower than market expectations, with 2.0% this time. Thus, the May CPI excluding food and energy came in below expectations. In the middle of these weak reports, the December CPI came in line with a consensus estimate of 0.1%. Meanwhile, the May CPI rose 0.11% from the previous 261.735.
Generally speaking, the CPI data for May presented mixed reports. Federal Reserve Chairman Powell said earlier that the bank would take appropriate steps in the event of an economic slowdown. Therefore, the mixed CPI data will press the central bank to make the rate cuts happen sooner.
On the other hand, the US-China trade dispute continued to damage global business. Trump and Chinese President Xi will meet at the G-20 meeting by the end of the month to discuss trade settlements. Going back to the performance of the US dollar index, the dollar hit a weekly low near 96.59 after the release of CPI data. However, the index took an immediate rebound and retreated from 96.80 points. The market appears to be waiting for a rate cut from the Federal Reserve.
EUR / USD
After trading on Wednesday near $1.1329 per euro, the pair seems to remain negative as the day approaches the closing. A slow bullish trend has been slowly showing in the Asian session, reaching a nearly 1.1343 high today. A slight early rise occurred on the background of mixed Euro data. Nonfarm payrolls for the first quarter of the year were up 0.2%, whereas market expectations were of 0.3%.
European Central Bank President Mario Draghi said today that Central and Eastern Europe is still vulnerable to the trade war. Draghi’s warnings kept the pair down. Later in the day, the European Central Bank (ECB) said its asset purchase program (APP) was a good source of financial relief. By mid-day the EUR / USD was testing the 1.1291 resistance level, to reach a daily low.
USD / CAD
The pair recorded a 0.21% gain in the European session amid mixed CPI data and crude oil price cuts. US CPI numbers were lower than expected, while Core CPI data showed some bullish figures. Meanwhile, commodity prices fell from $52.31 a barrel to $51.60 a barrel after disappointing environmental impact reports. The market was expecting -0.481 million this time. In some way, actual reports showed an increase of 2.206 million showing a shortage of demand for the commodity. Therefore, USD / CAD has maintained a good growth today, to receive support from the day’s high near 1.1316.
USD / CNY
China’s CPI and China’s PPI came in line with market expectations to lift the USD / CNY pair. The consumer price index rose 2.7% year-on-year, better than the previous 2.5%. Meanwhile the consumer price index (CPM) recorded 0.0% over the past 0.1%. The USD / CNY pair touched 6.9222 levels, recording the highest level of the day after Chinese data in the early morning. Later in the rest of the Asian session the pair seemed to be giving up the accumulated gains, eventually reaching 6.9132.