Date: 10 Sep 2019

The United States economy releases a string of important economic data points later this week, giving investors a final gauge of U.S inflation and spending metrics ahead of next Wednesday’s highly anticipated interest rate decision from the Federal Open Market Committee.

Tomorrow the United States economy releases important producer price index data, which is expected to show that price pressures continue to move higher during August. On Thursday the United States economy releases consumer price index data, with a marginal 0.2 percent increase in consumer inflation expected to have occurred last month.

The release of retail sales data from the American economy on Friday has the potential to ignite substantial volatility in financial markets, given the importance of consumer spending on the world’s largest economy. Market consensus is looking for a 0.2 percent increase in retail spending, which is fairly sizeable drop from the 0.7 percent July headline figure.

Retail sales figures are known to fluctuate fairly wildly, although consumer spending has gradually been increasing each month, offsetting fears that the U.S economy is slowing. Should the upcoming batch of economic data points hold steady, it will become more difficult for the FOMC members to justify a rate cut greater than twenty-five basis points at next Wednesday’s meeting.

The recent Non-farm payrolls U.S monthly jobs report showed that the jobs market is still holding firm, with a slightly weaker than consensus 130,000 headline number. The U.S unemployment rate held steady, while wages increased on a monthly basis, further highlighting a steady jobs market and mild price pressures.

The recent positive signs coming from Sino-U.S trade calls is also another point to consider when going into next weeks, as it could be mentioned in the FOMC policy statement if we see positive tones coming from the U.S trade team ahead of the rate decision.

 

 USD/CHF Daily Candlestick Chart | Source: ActivTrader

USD/CHF Daily Candlestick Chart | Source: ActivTrader

 

The U.S dollar is increasingly finding it hard to rally against the Swiss franc as the greenback comes under slight pressure on the foreign exchange markets. Sellers need to break below the 0.9780 level to accelerate technical selling towards the 0.9640 area, while buyers need to force price above the current monthly trading high and attack towards parity.

 

Written by Nathan Batchelor, External Analyst, ActivTrades

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