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The British CPI figure came out today. It came in at 1.8% which was lower than the forcasted 1.9%. It would appear this data has all but ruled out another interest rate hike this year, maybe even for next year as well. There is even speculation of a rate cut before the end of the year. It’s important to remember that these numbers are lagged, so we are probably starting to feel the full effect of all the previous rate hikes in the UK. It seems Mervyn King has done a good job at controlling inflation so far, but there are still inflationary pressures that may not be fully “priced in” to the these figures. At the time of writing, Oil was making record highs in excess of $88 per barrel. If oil remains this high, it may send this figure back over the 2% area in the coming months.

Read the full post of British CPI Lower than expected. Cable slumps

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Somehow I think this might be relative to our favorite USDJPY, GBPJPY and EURJPY with his sudden decision to quit.

From Reuters,

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe abruptly announced his resignation on Wednesday after a year in power dogged by scandals, an election rout and a crisis over Japan’s support for U.S.-led operations in Afghanistan.

Read the full post of Shinzo Abe Steps Down as Japan Prime Minister

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Caught fire with the NFP result? Shouldn’t be if your a technical trader!

Forex Factory:USD

Nonfarm Employment Change

-4K

110K

68K

GBPUSD

All duration charts were showing the candles are above 200ema/sma lines. MACD shows that there’s decent strength still for the buy side, and the breakout on the top trendline since the candle is closer towards the top (Easier to break the resistance)

Read the full post of NonFarm Payroll Results, Lets Get Back And Look At The Technicals

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I like reading from Investica, a pity they’re updating all these manually without RSS.

The US currency will gain further safe-haven support in the short term as credit stresses persist. It is particularly significant that emerging-market currencies have started to come under pressure as this will increase the potential flow of funds back into the US dollar.

Read the full post of Investica - Flight to Quality Boosts Dollar

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Aug. 14 (Bloomberg) — The euro declined for a second day against the dollar and yen after the European Central Bank provided more cash to banks to ease a credit squeeze prompted by losses on U.S. subprime mortgages.

Europe’s common currency touched a four-month low against the yen after the region’s central bank loaned banks funds for a fourth trading day. UBS AG said profit may be hit this year because of turmoil in financial markets, and a Spanish newspaper reported Banco Santander SA has more than 2 billion euros ($2.7 billion) of investments in U.S. high-risk loans.

Read the full post of Bloomberg - Euro Falls Versus Dollar on Signs Subprime Losses Spreading

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The sharply lower than expected inflation rate will increase pressure for a further interest rate increase to be postponed and this will undermine the UK currency in the short term even if the July data proves to be erratic.

Sterling weakened to five-week lows below 2.01 against the dollar on Monday before a tentative recovery to 2.0120 and managed to regain some ground against the Euro. The UK currency was holding close to 2.01 on Tuesday before weakening sharply after the UK inflation data.

Read the full post of Investica - Inflation Data Weakens Sterling

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Mmn, that’s surprisingly sweet to the Yen. A few sources of news on this piece here.

The Japanese currency strengthened to near 118.0 against the dollar on Thursday and reversed Wednesday’s heavy losses against the Euro as volatility remained very high. The Japanese currency strengthened through the 118.0 barrier in Asian trading on Friday as Asian stock markets continued to weaken with markets looking at important dollar support near 117.50. The dollar attempted to stabilise close to 118.0.

Read the full post of Yen Gets Boosted

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