No Love For The Dollar
The US dollar has been a dog for more than a year but the trade on Valentine's Day showed just how unloved it is. The dollar was a major laggard despite strong inflation data while commodity currencies soared. Australian jobs numbers are up next. A 2nd Aussie trade has been issued today to gear up for Aussie jobs figures due at 19:30 ET, 00:30 GMT/London, one of the trades is long AUD other is short AUD with the idea that both will move towards target over time based on the relationship between the cross currency relationship. Gold and silver were the stars of the day. Here is our reasoning 20 mins prior the release of US CPI & retail sales on why gold should rally regardless of the outcome.
All eyes were on US inflation numbers Wednesday as worries about inflation derailing corporate earnings and growth continue to circulate. The worst happened as CPI rose 0.5% m/m compared to +0.3% expected. Core numbers were equally hot.
The dollar shot higher on the headlines in 50-80 pip moves across the board but the highs were within moments. From there the US dollar embarked on an epic reversal that included a rally in cable to 1.40 from 1.3800 and in the euro to 1.2455 from 1.2275.