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Consumer Price Index (CPI)

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The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available.

The U.S. Bureau of Labor Statistics (BLS) reports the CPI on a monthly basis and has calculated it as far back as 1913. It is based upon the index average for the period from 1982 through 1984 (inclusive) which was set to 100. So a CPI reading of 100 means that inflation is back to the level that it was in 1984 while readings of 175 and 225 would indicate a rise in the inflation level of 75% and 125% respectively. The quoted inflation rate is actually the change in the index from the prior period, whether it is monthly, quarterly or yearly.

The Consumer Price Index (CPI) produces both unadjusted and seasonally adjusted data.
Seasonally adjusted data are computed using seasonal factors derived by the X-13ARIMA-SEATS seasonal adjustment method. These factors are updated each February, and the new factors are used to revise the previous 5 years of seasonally adjusted data. The factors are available at the U.S. Bureau of Labor Statistics.

For more information on data revision scheduling, please see the BLS Factsheet on Seasonal Adjustment at and the Timeline of Seasonal Adjustment Methodological Changes.

EURUSD Daily FX Update JUL 13

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EURUSD FX Daily Update

EURUSD Daily FX Update for Monday, July 13, 2020. The United States continues to get hammered with exploding cases of the Coronavirus. The state of Florida just recorded more than 15k cases in a single day, the largest number of single day cases in the US for any state so far.

There is a likelihood that the US will start to see a return to economic shutdowns, or at the very least a very extended economic slowdown that could well exist into the spring of next year.

Meanwhile the Eurozone has largely contained the virus and has begun recovering economically. The one thing hanging over the EU is the prospect of Brexit and how the negotiations will playout.

Of note on the economic calendar today is Fed Williams Speech and the Monthly Budget Statement for June.

EURUSD short-term technicals: Bullish—the pair looks strong on the 1- and 4-hour charts with an eye toward the Core CPI numbers due out tomorrow.

R3: 1.1726, R2: 1.1577, R1: 1.1405, P: 1.1256, S1: 1.1084, S2: 1.0929, S3: 1.0760

UK Preps Population for Post Brexit

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A new marketing campaign from the UK government is set to go live on Monday to prepare the public for life after the Brexit transition period. According to The Guardian the campaign will include TV, radio and digital adverts. Negotiations with the EU continue but have been unproductive so far.

Travelers from the UK are being advised to take out additional travel insurance if they are traveling abroad from January. The new advice is part of the government’s ‘The UK’s new start: let’s get going’ campaign.

Cabinet Minister Michael Gove said on Sunday progress was being made in talks but there were still divisions.

“At the end of this year we are leaving the single market and Customs Union regardless of the type of agreement we reach with the EU,” he said. “This will bring changes and significant opportunities for which we all need to prepare.”

Britain left the European Union on Jan. 31, three and a half years after a referendum, but a transition period has delayed any major change in the relationship. This campaign smooths the way forward for a possible no deal Brexit in December.

EURUSD Daily FX Update JUL 10

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EURUSD FX Daily Update

EURUSD Daily FX Update for July 10, 2020. June Industrial Production for France and Italy beat expectations (+19.6% m/m and +42.1% m/m respectively). However, due to the global pandemic, output still remains significantly off of levels seen at the beginning of the year.

Next week’s summit on the EUR750bn recovery fund—which EU leaders are trying to make more palatable for “thriftier” nations—remains key to the Eurozone outlook (and the EUR). By year end, many experts believe a the recovery fund will be extended or expanded. As of the close yesterday, the DAX is up 22% in USD terms over the past three months while the Euro Stoxx 50 index is up 16.5%, compared to a gain of just under 9% for the DJIA and around 13% for the S&P 500.

European Central Bank Executive Board member Isabel Schnabel recently took a surprisingly upbeat, albeit cautious, tone about the post-pandemic recovery prospects for the region. We think investors will bet on the EUR due to better management of the COVID-19 situation and a smoother economic rebound.

EURUSD short-term technicals: Bullish—EUR losses from yesterday’s peak have steadied and reversed from key support at 1.1260. Intraday price signals (on the 1– and 4-hour charts) suggest that the EUR has bottomed and a reversal should follow. We see key resistance at 1.1310/20 ahead of the weekend and a return to 1.1370/90 next week.

GBP/USD Targets 1.26 Level Fueled by EU Flextension Offer

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The GBP/USD pair is testing the 1.26 mark, +0.45% on the day as of this writing. Cable is pushing higher amid renewed optimism for a possible Brexit deal following an rebuffed offer by EU’s chief negotiator Michel Barnier for a “flextension”. This comes in the face of both sides in the EU/UK negotiations ratcheting up the rhetoric over the last weeks.

Coronavirus restrictions have severely impacted the talks, which so far have mostly taken place via video conference. However with the restrictions easing new talks are now taking place in person. Albeit with social distancing measures still in place.

Prime Minister Boris Johnson has insisted he wants to secure a free trade agreement deal by the end of the summer at the very latest.

Barnier revealed he had offered Downing Street a “flextension” or “precautionary extension” of the transition period. However, this was rejected by Johnson who has signalled that the UK is prepared for a no-deal Brexit.

Hong Kong Dollar Peg: The Bass/Trump Connection

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In a move widely panned by economists, the Trump administration is reportedly weighing options to break the longstanding Hong Kong Dollar peg.

Bloomberg News reported that the idea from some officials to put a strain on the 37-year-old peg, by limiting local banks’ access to US dollars, has been raised as part of broader discussions among advisers to Secretary of State Michael Pompeo. This comes as the White House looks for broad options to response to China’s new security law.

The White House isn’t alone in its currency based posturing. According to a recent article published in the South China Morning Post, China must brace for a full-blown economic escalation with the United States. Preparing for a gradual decoupling of the Chinese yuan from the US dollar is part of the deteriorating relations between the two countries.

Zhou Li, a former deputy director of the Communist Party’s International Liaison Department, is just the latest voice within China calling for the country to be ready for a currency split with the US amid growing signs of financial war in recent weeks.

“By taking advantage of the dollar’s global monopoly position in the financial sector, the US will pose an increasingly severe threat to China’s further development,” Zhou wrote in the full version of an article published on Saturday by the Beijing-based think tank Chongyang Institute for Financial Studies at Renmin University.

However, many economists are warning that targeting the long-standing HKD/USD peg would only harm Hong Kong banks and the US. Potentially leaving China in a better position. The economic impact could be disastrous on a global scale.

This begs the question of why the US would target the Hong Kong Dollar in response to the China security bill. One answer maybe hedge fund manager Kyle Bass.

Last July, ProPublica reported that Bass was able to present his anti-China views to high level government officials in a meeting at the US Treasury Department. His connection was friend Tommy Hicks Jr., one of Donald Trump Jr.’s hunting buddies.

According to a June article in Bloomberg, Bass had already been shorting the Hong Kong currency for more than a year. And was planning to “use options contracts with 200-times leverage to bet the currency pairing — officially set at 7.80 per US dollar — won’t last for the next 18 months.” This according to Bloomberg sources.

The Trump Administration has a history of allowing non-government parties to influence, or help set, policies they would directly benefit from. With that in mind, it is our opinion that the possibility that the US attempts to undermine the Hong Kong dollar peg is quite real.

What is Forex?

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What is Forex?

Forex (FX) is the marketplace where various national currencies are traded. The forex market is the largest, most liquid market in the world, with trillions of dollars changing hands every day. There is no centralized location, rather the forex market is an electronic network of banks, brokers, institutions, and individual traders (mostly trading through brokers or banks).

Many entities, from financial institutions to individual investors, have currency needs, and may also speculate on the direction of a particular pair of currencies movement. They post their orders to buy and sell currencies on the network so they can interact with other currency orders from other parties.

The forex market is open 24 hours a day, five days a week, except for holidays. Currencies may still trade on a holiday if at least the country/global market is open for business.

RBA Maintains Current Policy Settings

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AUD News

At its meeting today, the Reserve Bank of Australia (RBA) Board decided to maintain the current policy settings, including the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points.

According to the press release, the Bank’s market operations continue to support a high level of liquidity in the Australian financial system. Authorized deposit-taking institutions continue to draw on the Term Funding Facility, with total drawings to date of around $15 billion. Further use of this facility is expected over coming months.

Following this announcement the AUDUSD pair immediately flashed higher toward the upper 0.697 range. The initial move may have been short lived as the pair was back down in the 0.696 range as of this writing.

Reserve Bank of Australia

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Forex Attack Team
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About the RBA

The Reserve Bank of Australia (RBA) is Australia’s central bank and derives its functions and powers from the Reserve Bank Act 1959. Its duty is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. It does this by conducting monetary policy to meet an agreed medium-term inflation target, working to maintain a strong financial system and efficient payments system, and issuing the nation’s banknotes.

The RBA provides certain banking services as required to the Australian Government and its agencies, and to a number of overseas central banks and official institutions. Additionally, it manages Australia’s gold and foreign exchange reserves.

Reserve Bank of Australia Preview: Look for an Interest Rate Decrease

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Forex Attack Team
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The Reserve Bank of Australia will announce its latest decision on monetary policy shortly. On the 2nd of June 2020 the RBA left the official cash rate unchanged. The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 0.25%.

The RBA rate indicator provides market participants and commentators with a market monitor for official cash rate expectations in Australia

What is the RBA Rate Indicator saying today?

As at 6 July, the ASX 30 Day Interbank Cash Rate Futures July 2020 contract was trading at 99.870, indicating a 62% expectation that the interest rate will decrease to 0.00% at the next RBA Board meeting. However, despite these contract numbers, a large number of pundits are predicting that the interest rate will stay unchanged.

Adding to record low rates, the central bank has indicated bond-buying might be on the table, although it has only purchased government debt on one occasion.

While economic news out of China has been upbeat of late, strained tension between Australia and China could continue to depress the Aussie dollar.

Earlier the AUD/USD pair briefly traded up near the 0.7 mark before dropping lower to the 0.696 region. Look for large moves if interest rates do indeed drop to 0.0%.

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