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TD Securities analysts note that this week’s intense focus on the U.S.-China trade dispute pulls attention away from macroeconomic data releases. However, analysts further note that the USD could be marginally  more sensitive to an unexpectedly weak Consumer Price Index (CPI) tomorrow than a stronger one.

Key quotes

“The recent uplift in energy prices may have skewed expectations in some quarters to look for upside risks to this measure. That said, we do not think global investors will allocate a lot of bandwidth to macro considerations in a week when global trade tensions are approaching a peak.”

“Typically, we would look to USDJPY as the exchange rate with the clearest expression of directional risks to the US CPI report. In the current circumstances, however, that pair’s sensitivity to risk  appetite makes this more difficult. Instead, we note that EURUSD currently stands near the midpoint of its recent 1.1135/1.1265 trading range.”

“While the US CPI data could propel the USD toward one of the boundaries on an outlier print, we downplay the chances of a breakout on the basis of a data surprise alone.”