Mixed data and dollar trend continues

The ‘buy dollars wear diamonds’ trend remains despite mixed data releases around the globe in the past 24 hours. The dollar is back in demand across the board following a 0.1% outcome to the US CPI reading, which was slightly higher than the flat expectations. The disinflation scare certainly wasn’t in the rear view mirror for long as overnight the New Zealand Q3 CPI disappointed the market expectations of 0.5%. The RBNZ’s forecast of 0.7% came in at 0.3%, which has seen a rise in interest rates in New Zealand pushed out to Q4 2015.

There is a lot of market discussion on the upcoming referendum in Switzerland, where a proposal for the SNB to hold 20% of their reserves in gold is to be decided. A ‘yes’ outcome may have significant issues for the ammunition the SNB has for keeping the 1.2000 floor in EURO/CHF. The details suggest that if the outcome was indeed a ‘yes’, then the SNB would need to buy 1.5 times their current gold reserves whist diversifying away from other assets, and possibly their large euro holdings.

The PMI data from Europe has been mixed this morning as we saw contrasts between France and Germany. The latter reading is likely to strengthen the Germany opposition to further ECB QE measures in the form of sovereign debt purchases.

France

Manufacturing 47.3 versus 48.5 consensus

Services 48.1 versus 48.3 consensus

Composite 48.0 versus 48.7 consensus

Germany

Manufacturing 51.8 versus 49.5 consensus

Services 54.8 versus 55 consensus

Composite 54.3 versus 53.6 consensus

The proud pound is trading at a one-week low, with EUR/GBP trading above 0.7900. UK retail sales came in -0.3% versus the Scottish referendum weakened expectation of -0.12%

This afternoon we get US PMI data along with leading indicators as the latest consumer confidence reading from Europe is also on the agenda.

EUR/USD

Supports 1.2605-1.2580-1.2501  | Resistance 1.2670-1.2740-1.2800

USD/JPY

Supports 107.05-106.55-106.25 | Resistance 107.80-108.00-108.30

GBP/USD

Supports 1.5985-1.5940-1.5875  | Resistance 1.6080-1.6125-1.6185