IQ Morning Briefing July 10th

IQ Morning Briefing July 10th

Five most important news to start your day. These events are very likely to influence the market and trigger exchange rate fluctuations. Read to stay informed.

Event: China Consumer Price Index (CPI) YoY

Chinese officials reported newly updated figures for the national Consumer Price Index (CPI). The indicator is currently equal to 1.5% year-over-year. CPI is often used to estimate the inflation. Central banks turn to the indicator in the calculation of the benchmark interest rate. It is, therefore, one of the key indicators for monetary policy.

Moderate inflation is capable of stimulating business activity in the country, while reading above 10% can hinder economic growth and make business conditions deteriorate. China’s Consumer Price Index was on par with experts’ estimates. The CNY appreciated against the USD in the beginning of the trading session this Monday.

Event: Bank of Japan Governor Kuroda Speaks

Haruhiko Kuroda, Governor of the Bank of Japan, delivered his speech today. BOJ sets short-term interest rates and can therefore affect the exchange rate of the Japanese yen. Depending on the context of the speech, the exchange rate of the JPY can appreciate or deteriorate.

Despite the most optimistic outlook for the regional market in 12 years, provided by the Bank of Japan this morning, the JPY demonstrated downward movement against the USD in the beginning of the trading session.

Event: BoE Woods Speech

Another central bank will deliver the speech this Monday. The Bank of England’s Woods will discuss the United Kingdom interest rate with the press. Almost one month earlier, the Bank of England voted to keep the bank rate at a record low level of 0.25%.

The exchange rate of the GBP can be expected to react to the information provided in Woods’ statement. Should the interest rate be revised upwards, the British pound will appreciate against other currencies. Negative revisions, though not expected, can lead to further depreciation of the GBP.

 

Event: United States Change in Labor Market Conditions Index

The Labor Market Conditions Index (LMCI) was introduced by the Federal Reserve. The index is designed to assess the labor market conditions in the United States based on 19 different indicators (including wages, unemployment, layoffs etc.). Labor market conditions mirror the general economic trend in the country, though with a noticeable delay. As a rule, when the national economy is on the rise, labor conditions will also improve.

The index improved by 2.3 and 3.7 index points in May and April of 2017 respectively. Further improvement of labor conditions can positively affect the exchange rate of the USD.

Event: German Trade Balance

Trade balance signifies the difference between the value of exported and imported goods. Positive dynamics of the indicator demonstrates prominent export-oriented development and an upward trend in the national economy. Higher than expected readings can lead to the appreciation of the Euro, while lower than expected readings can cause the European currency to deteriorate.

 

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.