US CPI met expectations

U.S. consumer prices data on Thursday showed a steady build-up of inflation pressure that could allow the Federal Reserve to hike interest rates as many as four times in 2018. US consumer prices climbed 0.1% in June, but less than expected, although rose on an annual basis to 2.9% from 2.8%.

The EUR/USD pair fell to a fresh weekly low of 1.1649 after the release of ECB’s Minutes, which repeated the dovish stance offered by Draghi a month ago, somehow overshadowing the recent reports that suggested some policymakers are willing to raise rates sooner. Data coming from the EU was generally encouraging, as German harmonized CPI held at 2.1% YoY in June, as expected, rising monthly basis by just 0.1%, also matching previous and market’s forecast. EU Industrial production, however, surprised to the upside, up 1.3% monthly basis in May, and by 2.4% when compared to a year earlier.

The USD/JPY pair held on to its strong gains near six-month tops and had a rather muted reaction to the mixed US macro data. The pair moved little and remained near mid-112.00s after the latest US CPI print fell short of consensus estimates, but this did little to dent the prevailing strong bullish sentiment surrounding the US Dollar. The dollar this week has strengthened significantly against the Japanese yen, which normally is bought as a safe haven in times of political tension and market turmoil.

Sterling is pressed to 1.3200 level after the long-awaited Brexit white paper saw the UK Prime Minister Theresa May dropped the claim of the EU single market access for the UK-based banks while claiming “a principled and practical Brexit”, arguing that its proposals address questions raised by the EU in the intervening months. In terms of fundamental, neither the UK government’s Brexit white paper, not US inflation affected the market, with GBP/USD remaining weak, falling as much as 0.2 %to $1.317, its lowest level since July 3, as investors remained on edge about the resignation of two key Eurosceptic ministers.

Prices of the barrel of light crude oil are slightly below the $70.00 mark on Friday as concerns about a China-U.S. trade war and the return of Libyan oil to the market continued to be cited as catalysts for the selling. The International Energy Agency, however, raised expectations for a global shortage in crude supplies as the energy watchdog warned of a potential capacity crunch amid a rise in output from Middle East Gulf countries and Russia, helping oil prices to recoup some losses.

Gold has been trading down for most of the week, and is currently at 1,244.70 a troy ounce. The incoming US economic data, reaffirmed expectations that the Fed would hike interest rates at least two more times in 2018 and prompted some aggressive selling around the non-yielding yellow metal. This coupled with intensifying trade rhetoric between the world’s two largest economies, exerted some additional downward pressure and pushed gold to over one-week lows.