Global equities had a mixed performance, falling in the EU ahead of the ECB rate decision, but some green shoots in the US and Asia despite US inflation rising slightly.
Chart: EURUSD
Headline CPI surprised slightly to the upside at 3.7% annual, compared to 3.6% expected, marking the second straight acceleration. On the other hand, core CPI was bang in line with expectations at 4.3%, a September 2021 figure, but the monthly rate came in moderately higher at 0.3% compared to the 0.2% forecast. The Dollar was up ahead of the CPI report, and despite initially rising to 104.96, it fell to give away most of its gains. It still closed up, though, having eurodollar 0.23% in the red at $1.0729, with resistance at $1.0794 and support at $1.0606.
The EIA reported that US crude inventories grew by 4M bbl last week, above the 2M bbl drawdown that was forecast. Gasoline saw a jump of 5.6M bbl versus a drawdown of 0.5M forecast. Refinery utilisation was higher, explaining the build, with the SPR growing just 0.3M bbl. Crude moved further from $90 a barrel it was trading early Wednesday during a volatile post-EIA session but closed largely mixed. $87.20 is expected support from lack of demand.
July UK GDP came in at -0.5% below the -0.3% forecast, eclipsing the June gain. It was the largest contraction since the end of last year. The rolling three-month GDP figure consequently disappointed at 0.2% compared to the 0.3% forecast. Manufacturing production declined by -0.8%, better than the -1.2% forecast, which appeared to have assisted the pound stay afloat above $1.2487, barely gaining compared to the day’s open. With a new regional low in at $1.2433, bulls may be targeting $1.2550 next.
The unemployment rate in Australia was reported unchanged at 3.7% early Thursday, as expected, with the country more than doubling job creation expectations, adding 64.9K jobs compared to the 25K forecast. The rate-sensitive Australian 2-year yield outperformed its American counterpart, seeing AUD/USD already advancing to 0.6455 and leaving support at 0.6420 behind.
In his inaugural press conference, Japan’s newly appointed Economy Minister, Yoshitaka Shindo, pledged to use “all possible measures” to support the economy. While doubling down on his predecessor’s view that ending deflation is a priority, he allowed that there had been signs that deflation might be coming to an end, a precursor for potentially ending ultra-easing policies that have been seen weakening the yen. USD/JPY traded as low as 147 early Thursday, opening up 146.57 unless bulls reclaim 147.45.