1. For the most part of the day yesterday and today the markets have been without a clear direction. The Dollar got a temporary boost from better than expected Producer Price Inflation data, however the gains were evaporated in anticipation of the big data today, CPI. Higher inflation data will most likely lead to USD strength, as chances for a December rate hike will then improve significantly.
2. The Sterling was the biggest mover of the day in a brutal whipsaw price action. GBPUSD opened the day around 1.3250 and shortly afterwards collapsed 130 pips to 1.3120 n an ambiguous headline” BARNIER SAYS BREXIT TALKS HAVE REACHED DEADLOCK”. IN fact, this comment was completely misread as he was simply referring to the” divorce bill”. Then GBP rocketed to just shy of the 1.3300 level when German newspaper Handelsblatt says Barnier may offer the UK a 2ear transition stay in the EU market if the UK agreed to settle its financial obligations with the EU.
3. US stocks slipped from record highs to finish the day in the red. Risk sentiment in Asia remains positive overnight with indices 0.25%-0.5% higher. A series of key US data including the CPI and the retail sales have the potential to move the dollar today. The data are expected strong, but looking at this week’s mediocre USD performance, success isn’t guaranteed.
4. Gold prices moved higher on Friday to $1297, as sentiment on the USD remained vulnerable ahead of highly-anticipated data on U.S. inflation and retail sales due later in the day. Gold is sensitive to moves in both U.S. rates and the dollar. A weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as Gold .
5. Bitcoin rose as much as 7.4 % to a high of $5,846 in the Asia morning, according to Reuters data, before easing to $5,700. The cryptocurrency was in touching distance of $5,000 at the beginning of September before slipping below $3,000 on regulatory scrutiny from China.