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Today offers a balancing act on the tightrope of geopolitics, data, and monpol as the BoE offered little fireworks while much of the morning focus has been on Turkey, according to Mark McCormick, North American Head of FX Strategy at TD Securities.

Key Quotes

“The CBRT delivered a contentious rate hike, offering some broader support to EM. Alongside some of the recent developments in the US/China trade disputes, the backdrop leans negative for the USD into CPI.”

“The ECB did little to deter the EUR this morning, leaving it supported into US data. The growth downgrades were leaked, though the more important development is that they anticipate the end of QE in December.”

“That removes some of the uncertainty on that front, suggesting a further reduction in the pace of BS expansion. A key level to watch is a possible intraday break of 1.1660.”

“For the day ahead, we think it is best to follow the momentum into the US CPI release. A reduction in trade tensions, a firmer EM complex, and a stretched USD would benefit the broader G10 if CPI prints in line with consensus.”

“Historically, the USD tends to weaken on CPI days so we think it needs an upside surprise to reverse the squeeze. We also see risks of an asymmetric impact, calling for a bigger selloff on a miss against the rally on a beat.”


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