Market Drivers September 13, 2016

Commodollars seesaw
UK CPI slightly cooler
Nikkei 0.34% Dax 0.06%
Oil $45/bbl
Gold $1333/oz.

Europe and Asia:
CNY IP 6.3% vs. 6.2%
CNY Retail Sales 10.6% vs. 10.2%
GBP UK CPI 0.6% vs. 0.7%
EUR GE Zew 0.5 vs. 2.8

North America:
No Data

It’s been another night of seesaw trade with most of the majors tracing our narrow ranges amidst little fresh newsflow and generally subdued risk appetite.

The commodity dollars saw some selling pressure in late Asian dealing despite better than expected data out of China. But both Aussie and kiwi stabilized by London open as bid appeared ahead of the .7500 and .7300 levels respectively.

In China both the Industrial Production and Retail Sales data came in better than expected at 6.3% vs. 6.1% eyed and 10.6% versus 10.2% forecast. However, although recent data out of China shows stabilization on the back of government spending and consumer demand, private investment remain weak and many analysts fear that growth may slow below 6% as government curbs property values going forward.

The Aussie initially popped higher on the news, but gave up its gains almost instantly and drifted lower until buyer came in at .7500 level. The unit is likely to remain in a tight range until tomorrow’s AU employment report which promises to be the marquee release of the week.

Meanwhile in Europe UK CPI data was a bit cooler than expected at 0.6% versus 0.7% eyed. According to the ONS “The rate is still relatively low in the historic context although it is above the rates experienced in 2015 and early 2016. The main upward contributors to change in the rate were rising food prices and air fares, and a smaller fall in the price of motor fuels than a year ago.These upward pressures were offset by falls in hotel accommodation prices, in addition to smaller rises in the prices of alcohol, and clothing and footwear than a year ago.”

Cable drifted a bit lower on the news dropping below the 1.3300 level as the expected inflation from UK has failed to materialize. The pair is likely to base at the 1.3250 level for the rest of the day as markets await UK labor data tomorrow which will give traders a much better feel of the post-Brexit state of health of the economy.

In Europe the German ZEW came in at 0.5 versus 2.8, but euro saw little impact from the news. With no US data on the docket today, the North American session could mirror the seesaw action of the start of the day as most of the major FX pair continue to tread water around the current levels.

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