The dollar dipped on Friday after weaker – than – expected U.S. inflation data, with the currency already sagging on signs of reduced trade tensions between the United States and China. Emerging currencies, like the South African rand and the Mexican peso, held onto to gains having surged, as investors in emerging markets registered relief that Turkey’s central bank had hiked its policy rate to 24 percent to restore confidence in the lira. The Turkish lira was a shade weaker at 6.137 per dollar after ending the previous day on a gain of more than 4 percent. The lira surged after Turkey’s central bank raised its benchmark one-week repo rate by 625 basis points to 24 percent on Thursday, in a bid to stabilize the currency, which had slumped to a record low against the dollar a month ago. By tightening policy the central bank demonstrated an independent streak, as Turkish President Tayipp Erdogan is a self-declared enemy of high interest rates. The greenback took a hit overnight after the U.S. consumer price index (CPI), the government’s broadest inflation gauge, rose just 0.2 percent in August and less than the 0.3 percent.
The EUR/USD rallied because low inflation has become less of a concern. According to Mario Draghi, domestic cost pressures are strengthening and inflation should pick up toward the end of the year and rise gradually in the medium term. Regarding GBP/USD, looking ahead, the pair will continue to track the broader market sentiment and USD dynamics ahead of Carney’s speech today and key U.S. economic releases, including the retail sales and prelim UoM consumer sentiment.
In commodities, Gold rose on Friday as the dollar faltered after softer – than – expected U.S. inflation data dimmed the case for a faster pace of policy tightening by the U.S. Federal Reserve, amid signs of movement in the Sino – U.S. trade standoff. Regarding Oil, prices declined – suffering the largest daily drop in a month – despite an IEA report warning that lost output from Iran and Venezuela may tighten global supplies and increase costs.
For today the main economic calendar activities is the BOE Governor’s Carney speech and the US Retail Sales and Core Retail Sales m/m.