CPI and GDP rates in focus today

The UK’s CPI rates for July which were released earlier on today confirmed market expectations of an acceleration of inflationary pressures in the UK economy, but at a slower rate. In particular, the CPI rate on a year-on-year level came in lower than expected at 2.2% instead of the expected 2.3%, yet when looking at the bigger picture the CPI rate on a yoy level, despite being lower than expected, is still higher than the prior rate of 2% which is the bank’s inflation target. Nonetheless, the release tended to weigh on the pound, with GBP OIS currently implying a 55.31% probability for the bank to remain on hold in their September meeting, with the remainder being attributed to a potential 25bp cut. Over in Europe, the Eurozone’s preliminary GDP rates for Q2 are set to be released during today’s European session. The preliminary GDP rates on a qoq and yoy basis are expected to showcase a steady expansion of the Eurozone’s economy as a whole. As such, should the preliminary GDP rates come in as expected or higher, it may aid the common currency. On the flip side should the preliminary GDP rates come in lower than expected, it could weigh on the EUR.Over in America, the US CPI rates for July are set to be released in today’s American session, with analysts anticipating the headline rate to remain steady at 3.0%, whilst the Core CPI rate is anticipated to slow down from 3.3% to 3.2% which may imply easing inflationary pressures in the US economy. Overall should the CPI rates showcase easing inflationary pressures in the US economy, it could weigh on the dollar and vice versa.

WTICash appears to be moving in a sideways fashion. We opt for a sideways bias outlook for the commodity’s price and supporting our case is the commodity’s recent price action, which failed to break above our 78.00 (R1) resistance line, in addition to the RSI indicator below our chart which currently registers a figure near 50 implying a neutral market sentiment. For our sideways bias to continue, we would require the commodity’s price to remain confined between the 71.50 (S1) support line and the 78.00 (R1) resistance level. On the flip side, for a bullish outlook we would require a clear break above the 78.00 (R1) resistance line with the next possible target for the bulls being the 83.45 (R2) resistance level. Lastly, for a bearish outlook we would require a break below the 71.50 (S1) support line with the next possible target for the bears being the 64.10 (S2) support level.

AUD/USD appears to be moving in an upwards fashion. We opt for a bullish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure near 70, implying a bullish market sentiment, in addition to the upwards moving trendline which was incepted on the 5   of August. For our bullish outlook to continue, we would require gold’s price to clearly break above the 0.6670 (R1) resistance line, with the next possible target for the bulls being the 0.6735 (R2) resistance level. On the flip side for a sideways bias we would require the pair to remain confined between the 0.6590 (S1) support line and the 0.6670 (R1) resistance level. Lastly, for a bearish outlook we would require a clear break below the 0.6590 (S1) support line with the next possible target for the bears being the 0.6520 (S2) support level.

Other highlights for the day

Today in the European session, we get the Eurozone’s preliminary GDP rates for Q2 and during the American session we get the US CPI rates for July, followed by the US weekly EIA crude oil inventories figure. In tomorrow’s Asian session we get  Japan’s machinery orders rate for June, the country’s GDP rates for Q2, Australia’s employment data for July,  China’s urban investment rate , industrial output rate, retail sales rate and unemployment rate all for the month of July. On a monetary level we note the speech by the speech by St Louis Fed President Musalem during tomorrow’s late Asian session.

WTICash Daily Chart

• Support:  71.50 (S1), 64.10 (S2), 57.30 (S3)
• Resistance: 78.00 (R1), 83.45 (R2),  89.50 (R3)

AUD/USD 4H Chart

• Support: 0.6590 (S1), 0.6520 (S2), 0.6460 (S3)
• Resistance: 0.6670 (R1),  0.6735 (R2),  0.6810 (R3)

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