Disappointing U.S. Inflation sends U.S. Dollar lower

Key Movers

The Australian Dollar edged marginally higher into the close on Friday briefly edging back through 0.79 U.S cents. With little domestic data on hand to drive direction the AUD remained at the mercy of wider risk flows and touched intraday lows at 0.7844. As global political tensions escalate investors continued to seek haven assets bolstering demand for the CHF and JPY dampening demand for the AUD as a carry trade option. However weaker U.S inflation data helped fuel a late upturn and drove the AUD through 0.79 to touch intraday highs at 0.7908. Consumer prices rose at a slower pace than expected in July stifling investors’ expectations for multiple Federal Reserve rate hikes into the end of the year. Opening this morning buying 0.7889 U.S cents attentions now turn to Tuesday’s RBA meeting minutes and Thursday’s labour market data for direction through the week ahead.  


The New Zealand Dollar rallied into the close on Friday bolstered by softer than anticipated U.S inflation data. Having touched intraweek lows at 0.7258 the Kiwi’s weekly decline stalled as consumer prices in the U.S advanced at a slower pace than anticipated throughout July. The softer print forced a wider USD sell off and allowed the New Zealand dollar to move back through 0.73. Attentions now turn to today’s domestic retail print for direction into the start of the week. 


Poor inflation figures out of the United States on Friday evening sent the U.S. Dollar lower. The Core CPI reading of 0.1% for the month of July saw dovish FOMC member Neil Kashkari remark that the recent number is enough to hold off on any further interest rate hikes till inflation accelerates. The U.S Dollar Index finished 0.34% lower for the day with Fed fund futures now pricing only a 38% chance of an interest rate rise by the FOMC in December. EUR/USD railed higher to see intraday highs of 1.1845 after the CPI report before closing the week higher for the fifth week in a row above support at 1.18. Geopolitical risk continues to be a major play in currency movements as a round of Chinese data takes center stage today.