US CPI upside surprise may be undervalued

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
Chinese data

Weak August for the Chinese economy jolted stock markets pointing to addiction of economic growth to credit stimulus. High real estate prices kept high rates of investment in the sector, while industry and retail sales and fixed investment undershoot.

Meeting of the Bank of England

As noted in the previous analytical note, the growing gap between the growth of wages and inflation requires the Central Bank to shift focus from long-term political consequences to current economic problems. The rate hike is unlikely today, but attention should be paid to the results of the voting, which will show how the opinions of the officials were divided. Investors recorded profit on long positions and on the eve of the decision of the Central Bank , the GBPUSD pair found a balance near the level of 1.32.

SNB rate decision

Frank grew in the course of trading on Thursday despite disquiet of the Swiss Central Bank with overvalued franc rate and instability in the foreign exchange market. Rates on deposits and interbank LIBOR were left unchanged coinciding with the forecasts. The regulator does not lag behind his colleagues from the US and Europe and also does not skimp on verbal interventions to devalue the currency. However, the further dynamics of the currency will depend on the position of the Fed and the development of the situation on the Korean peninsula.

Consumer inflation in the US

The growth of the consumer basket in the US is expected at 1.6% in August after 1.7% in July. The rate of growth may be the worst since the beginning of 2015. However, one should not underestimate the likelihood of a positive surprise, given the devaluation of the dollar, the confident comments of Fed representative William Dudley and as a plan reason bad news on the US currency, which can also skew estimates.

Arthur Idiatulin
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This analysis is provided as general market commentary and does not constitute investment advice.
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