MARKET BRIEFING – LONDON OPEN 13.10.2015
Today, two of the biggest economies within the European Union are to release significant data. From the United Kingdom, we will have the latest inflation data and from the Euro Zones industrial engine, Germany we will have sentiment data which will be published after the damaging Volkswagen scandal has come to light.
UK CPI release
The action begins early this morning at 9:30 am London time, when the Office for National Statistics we will release the UK Consumer Price Index, which it is considered a benchmark for the U.K. economy inflation gauge as it measures the change in the goods and services purchased by the consumers.
The CPI is used for the Bank of England inflation target, which is currently set at 2%. The inflation rate is significant to a currency valuation because the rising consumer prices lead to the rising country’s interest rate.
The index inspects the weighted average of prices of a given basket, compounded out of consumer goods and services, which include items such food, medical services and transportation. The CPI is calculated by averaging the prices of the basket items, before categorising them by their importance.
The CPI number was steadily declining since the second half of 2011 when inflation hit the top of 5.2% in July. Last March the United Kingdom has officially entered “no growth zone” with the release coming to 0.0% for the first time in the index history. The May release disappointed the markets even further when it was published at -0.1%, entering the phase of deflation and prolonging the long-awaited interest rate hike further.The data is steadily fluctuating between -0.1% to 0.1%, the analysts expect the inflation indicator to remain near zero in the near future.
The British economy however still remains less susceptible to the economic slowdown than the rest of its European neighbours, since keeping own currency allows the UK for more freedom in market adjustments as well as to some extent prevents the spread of contagion from the destabilized recently Eurozone.
The recent hawkish comments on interest rates emanating from both current and past Bank of England officials has helped the British Pound appreciate over the past 5 trading sessions. This bullish feel to the Pound has continued into this morning. If a pickup in inflation is reported today the potential for an acceleration in the buying of the Pound should not be ruled out.
EURUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.1455
Target 2: 1.1260
Projected range in ATR’s: 0.0099
Daily control level: 1.1345
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5410
Target 2: 1.5215
Projected range in ATR’s: 0.0098
Daily control level: 1.5300
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 120.80
Target 2: 119.25
Projected range in ATR’s: 0.78
Daily control level: 119.60
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.9715
Target 2: 0.9540
Projected range in ATR’s: 0.0088
Daily control level: 0.9595
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3095
Target 2: 1.2895
Projected range in ATR’s: 0.0102
Daily control level: 1.2900
AUDUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.7440
Target 2: 0.7280
Projected range in ATR’s: 0.0081
Daily control level: 0.7300
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1179.00
Target 2: 1146.00
Projected range in ATR’s: 16.57
Daily control level: 1136.50
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 49.00
Target 2: 46.00
Projected range in ATR’s: 1.79
Daily control level: 50.55
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