Slowly but surely, we get closer to the end of the year trading, with most of the price action surrounding the economic news. One such financial news was today’s CPI or inflation in the United States.
While the number was in line with expectations, 0.1%, the market chose to focus on the Core CPI (inflation excepting the food and energy prices). Although still in line with the expected value, 0.2%, it was a touch higher than the previous release.
Because this is the preferred measure for inflation hat the Fed uses, the tick higher was enough for dollar bulls to show their teeth.
The best currency pair that expressed that bullishness was the USDCAD. It jumped to almost 1.28 on robust U.S. data, considering that the Retail Sales in the U.S. came out on the strong side too.
All eyes this Friday will be on the Canadian inflation data. If it fails to meet consensus, the pair may try for the magical 1.30 round number.
Euro on the Move
Despite everything mentioned above, the Euro was the star of the week. On every currency pair, crosses or the EURUSD major, the Euro made significant advances.
The commodity currencies were the ones to suffer the most against the common one. The EURCAD and EURAUD rose a couple or more big figures.
EURUSD topped around 1.1860, completely retracing the bearish move caused by the previous ECB meeting.
Moreover, the EURJPY tries to break higher, with all eyes being in the 134.50 area. A clean break there opens the gates to nothing but 140.
The Eurozone economies look better than ever after the 2008 financial crises. With Paris building a strong economic environment and Brexit driving companies out of the City of London, the perspective looks even brighter.
Recently, Airbus of France won over fifty billion Euros in orders from a middle-east investor, and this should put a floor on any possible Euro selling until the end of the year and the start of the new one.
With uncertainties in the U.S. regarding the new Fed Chairman and the tax reform plan, the obvious place to park the money for the rest of the year and the start of the new one seems to be Eurozone.
Among all the Euro pairs, the crosses, especially the commodity ones, appear to be the ones that have the most potential.
End of year flows are expected any moment now, with few critical economic events ahead.