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Data releases have limited impact as traders eye inflation rates

Data releases have limited impact as traders eye inflation rates

Once again yesterday, most of the main FX pairs were somewhat range bound. This could be explained in part by yesterday’s data printing fairly in-line with expectations. US Headline CPI rose by 0.4% in the month vs +0.3% predicted, lifting the annual rate slightly to 5.4%. In Europe, we saw industrial production drop by a further 1.6% in August – supply chain issues, particularly in the autos sector are having a heavy impact on this.

The minutes from the September FOMC meeting were released overnight. The two key points from this release were that QE tapering could start at $15bn a month (full announcement expected in November), and that some Fed officials fear inflation could last longer “than they currently assumed”. Traders’ reactions to this were somewhat limited, but the dollar has been holding a slightly softer tone over the past 24 hours.

As we get going this morning, EUR/USD has nudged closer to the $1.16 point, GBP/USD has pushed into the top half of the $1.36-1.37 range and EUR/GBP continues to trade within the narrow band between 84.5-85p. Data-wise there is a sparse schedule on both sides of the pond. The main pairs may then remain range bound, as traders apply caution as inflation concerns apply pressure.

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