UK CPI sees GBP outperform, while US Housing Starts prints its highest level since October 2007
Today’s notable outperformer is GBP, after the European morning's most notable data point saw UK CPI print higher than expected (Y/Y 0.10% vs. Exp. 0.00%). The positive CPI print fits in with recent BoE rhetoric, with the central bank forecasting that inflation is set to pick up towards the end of the year, when transitory factors such as low energy and food prices begin to dissipate. The GBP upside was further bolstered as a result of added significance given to the data on the back of recent BoE comments, with Forbes, Miles and Carney all commenting in recent days and giving the impression that the time for a rate hike is nearing.
Elsewhere, the notable US data of the day saw US Housing Starts reach their highest level since October 2007 (1206K vs. Exp. 1180K), with US single-family starts increasing 12.8% to 782k. As such, a slight uptick was observed in the USD, with EUR/USD going on to trip stops through the 100DMA at 1.1048, with this weakness filtering through to both EUR/GBP and EUR/JPY.
Finally, in terms of antipodean currencies, AUD kicked off the day trading marginally higher on the back of RBA’s minutes, which continued to refrain from significant AUD jaw-boning, while also adding that accommodative policy remained appropriate. However AUD/USD was unable to sustain this strength throughout the day and ended the European session in negative territory, while NZD initially saw strength after Fonterra (ASX:FSF) announced a reduction in supply/volumes for auctions, while the auction went on to see a first increase in average prices since March, which led to instant strength going through NZD/USD.
Looking ahead, tomorrow’s highlights include Fed minutes from their July meeting as well as US CPI and the German parliamentary vote on the Greek bailout programme.