Global overview
FX markets were cautious ahead of tonight’s US inflation reading. The Aussie rebounded from recent lows. The British pound was the best performer after UK PM Rishi Sunak surprised markets by announcing the return of former leader David Cameron.
USD cautious ahead of CPI
Global FX markets – and markets more generally – were steady overnight with investors cautious ahead of tonight’s critical US inflation numbers.
The US dollar was broadly steady although the greenback did climb further versus the Japanese yen with the USD/JPY up 0.1% overnight as it reached the highest level in 12 months.
The Australian dollar was stronger with the AUD/USD up 0.2% as it rebounded from levels near one-year lows.
The EUR/USD was up 0.1% ahead of quarterly employment and economic growth numbers due tonight.
GBP stronger as Cameron makes surprise return
The British pound was stronger overnight after former prime minister David Cameron made a remarkable return to the UK government – taking on the role as Foreign Secretary.
Prime Minister Rishi Sunak announced a broader cabinet reshuffle, sparked by the sacking of Home Secretary, Suella Braverman.
The GBP/USD gained 0.5% with the British pound stronger in other markets. The AUD/GBP fell 0.1% as it reached three-week lows.
That said, the GBP’s strength is more likely due to ongoing support from higher UK interest rates with the UK’s expected terminal rate now seen at broadly the same levels as the US. UK CPI is due on Wednesday.
Core inflation key for Fed
Looking forward, tonight’s US inflation result is likely to be the week’s highlight.
The market is looking for headline annual inflation to fall from 3.7% to 3.3%. Headline inflation has recently been more volatile as oil prices were jolted by geopolitical tensions.
The core annual number is expected to stay steady at 4.1%. This measure has recently been on a clear trajectory lower but remains stubbornly above the Federal Reserve’s 2.0% target.
FX mostly quiet, but GBP higher
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 13 – 18 November
All times AEDT
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