After US CPI, focus turns to Australian jobs, ECB, and more US data

During the Asian session, market participants will closely watch for the Australian employment report. Additionally, data from Japan, including Machinery Orders and Industrial Production, will also be released. Later in the day, the European Central Bank (ECB) will announce its decision, and key US data such as Jobless Claims, Retail Sales, and the Producer Price Index will be published.

Here is what you need to know on Thursday, September 14:

The US Dollar Index finished slightly higher on Wednesday but remained within recent ranges, mirroring the behavior of major currency pairs. US yields initially jumped but later retraced, with the 10-year yield settling at 4.25%. Wall Street experienced mixed results as investors remained cautious.

The US August Consumer Price Index (CPI) showed a 0.6% increase for the month and a rebound in the annual rate from 3.2% to 3.7%, surpassing market expectations of 3.6%. However, the annual core rate slowed as anticipated from 4.7% to 4.3%. The initial reaction in the US Dollar was positive, but it later pulled back. The numbers did not significantly alter the outlook for the upcoming Federal Open Market Committee (FOMC) meeting, and the market continues to anticipate a pause in monetary policy.

TD Securities on US consumer inflation:

In our view, today’s CPI report should not make a meaningful difference for Fed officials ahead of the September FOMC meeting. However, it does keep alive the odds of an additional rate increase for the November/December meetings, particularly if we see a follow-through of accelerating core inflation in the September CPI report.

Between the ECB decision at 12:15 GMT and ECB President Lagarde’s press conference at 12:45 GMT, important economic reports from the US are scheduled for release at 12:30 GMT, including Retail Sales, the Producer Price Index, and Jobless Claims. This convergence of key events is likely to result in increased market volatility across financial markets.

The European Central Bank (ECB) will hold its monetary policy meeting on Thursday. While a pause in policy is expected, reports suggesting that the staff will raise inflation forecasts have increased speculations for a potential rate hike. This event has the potential to trigger significant volatility in the Euro. Market participants will also closely watch ECB President Lagarde’s press conference for further insights and guidance.

ECB Preview: Forecasts from 10 major banks, a hike or a hawkish pause?

EUR/USD is holding above 1.0700, but upside gains are being limited around 1.0770. The pair lacks a clear bias, and significant swings are likely on Thursday.

The UK economy contracted by 0.5% in July, worse than the expected 0.2% contraction, following a 0.5% expansion in June. GBP/USD initially dropped and reached the 200-day Simple Moving Average but later climbed back to 1.2500.

USD/JPY rose on Wednesday but remains below recent highs. The pair is hovering around 147.50, with 148.00 acting as key resistance. In Japan, on Thursday, important data including Machinery Orders for July and Industrial Production will be released.

Switzerland will release the Producer and Import Price Index on Thursday. The Swiss franc is likely to experience sharp volatility due to the ECB decision. USD/CHF posted its highest daily close in two months around 0.8930. The bias is on the upside, but the 0.8950 resistance level remains intact.

USD/CAD ended lower around 1.3550 after hitting the lowest level since September 1 at 1.3520. Canada will report July Wholesale Sales.

AUD/USD managed to hold above 0.6400 and continues to move around the 20-day SMA at 0.6420. The Melbourne Institute will release its inflation expectation report, and later the Australian Bureau of Statistics will publish the Employment Report. A positive change of 23K in employment is expected after last month’s decline of 14.6K.

The New Zealand dollar outperformed on Wednesday. NZD/USD continues to test the 20-day SMA at 0.5920. AUD/NZD pulled back after reaching the lowest level in a month on Tuesday.

Metals remain bearish, with Silver trading below $23.00 and Gold looking at $1,900. XAU/USD settled at $1,908, marking the lowest close in three weeks.