US CPI causes market swing.

The foreign exchange (FX) markets experienced a day of mixed trading conditions on 12th July 2023 as market participants reacted to key data releases and geopolitical developments. Here’s a recap of the events that shaped the market on that day:

GBP (British Pound): The British Pound (GBP) remained relatively stable on 12th July as it reacted to important economic data. The focus of market participants was on the UK inflation data, which came in line with expectations, showing a slight increase. This outcome had a limited impact on the GBP, as it confirmed market expectations and did not deviate significantly from target levels. Looking ahead, the upcoming release of UK GDP data, expected later in the week, will be closely monitored to gain further insights into the overall health of the UK economy.

EUR (Euro): The Euro (EUR) displayed resilience on 12th July as market participants analyzed economic data releases and monitored geopolitical developments. The Eurozone’s industrial production figures for June were released, providing insights into the region’s manufacturing sector. While the data had a limited impact on the EUR’s performance, market participants continued to pay attention to speeches and comments from European Central Bank (ECB) officials, seeking hints regarding the central bank’s monetary policy stance. Geopolitical factors, including trade agreements and fiscal policies within the Eurozone, also influenced the EUR’s movements.

USD (United States Dollar): The United States Dollar (USD) experienced volatility on 12th July, driven by key data releases. The highly anticipated US Consumer Price Index (CPI) data for June was released, indicating a lower-than-expected increase in inflation. This surprise triggered market reactions as it raised concerns about the pace of price growth and its potential impact on future monetary policy decisions by the Federal Reserve. The USD faced selling pressure following the release of the CPI figures, as market participants adjusted their expectations regarding the central bank’s next moves.

Key Data Releases:

  • UK Inflation Data: The release of UK inflation data confirmed market expectations, showing a slight increase within the anticipated range. While the impact on the GBP was limited, the figures were closely monitored for potential implications on monetary policy decisions by the Bank of England.
  • Eurozone Industrial Production: The Eurozone’s industrial production figures for June provided insights into the region’s manufacturing sector. Although the data had limited influence on the EUR’s performance, it contributed to the overall market sentiment.
  • US CPI Data: The release of the US Consumer Price Index (CPI) data for June had a significant impact on the FX markets. The lower-than-expected increase in inflation raised concerns about future monetary policy decisions by the Federal Reserve and led to increased volatility in the USD.

In conclusion, the GBP and EUR held steady on 12th July, while the USD reacted to key data releases. The market was influenced by the release of UK inflation data, Eurozone industrial production figures, and the US CPI data. As the week progresses, further data releases and geopolitical developments are expected to shape market sentiment and currency movements in the FX markets.

Economic Calendar

06:00GBP Manufacturing Production (YoY)(May)-1.2%-0.6%
12:30USD Initial Jobless Claims(Jul 7)250k248k
12:30USD Producer Price Index ex Food & Energy (YoY)(Jun)2.6%2.8%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.