US Initial Jobless Claims data was released on Thursday, coming in at 258K against 230K expectations and prior results of 225K. This points to signs of weakness in the US labor market and suggests the Fed will continue cutting rates, keeping the dollar on the defensive below its highest level since mid-August.
September FOMC meeting minutes and stronger than expected US inflation figures reaffirmed the idea that a cut will take place and the Fed will have a softer policy easing stance. Annual CPI inflation fell to 2.4, against 2.3% expectations and prior results of 2.5%.
Looking at the end of the week, US PPI data will be released as well as Michigan consumer sentiment data. Headline PPI is expected at 1.6% YoY, compared to 1.7% previously. While core PPI is expected at 2.6% against 2.4% previously.
EURUSD stays on the defensive below 1.0950 as hotter than expected US CPI inflation on Thursday gave some support to the greenback. The next focus for the pair is US PPI inflation coming out today.
EURGBP gained traction to 0.8380, up 0.11% on the day, after the release of German HICP inflation data and UK growth numbers. German HICP rose 1.8% YoY in September, in line with expectations and previous figures.
Meeting accounts showed that the ECB remains confident that inflation will be on track to hit the 2% target. Future policy easing will be gradual and data dependent as the ECB is expected to cut to 3.5% next week, with economists expecting a 95.4% chance of a rate cut.
Cable is keeping its current range around 1.3050 this morning, following positive UK GDP and August industrial growth data. Traders will be looking at today’s US PPI data for any short volatility in the pair, as the US Dollar consolidates weekly gains.
The Office for National Statistics released data that the UK economy grew by 0.2% over the month in August. Traders will now shift their attention to UK employment data coming out next week.
