Global macro overview for 15/09/2017

Global macro overview for 15/09/2017:

North Korea's night ballistic test passes without a great echo. There are at least three reasons behind this reaction. Firstly, a missile flying over Japan and falling into the Pacific is not interpreted as entering a conflict to a higher level (despite the hydrogen bomb owned by North Korea and the greatest reach achieved in today's test). Second: the intention of the tests was discovered by the Japanese agency Nikkei well in advance. Third: Investors now have a lot to digest - the central banks changing the rhetoric and picking up momentum.

Yesterday's inflation data from the US were better than expected as US consumer prices rose 0.4% in August compared with consensus forecasts of a 0.3% monthly gain. On a yearly basis, the CPI increased to 1.9% from 1.7% beating the expectations of a smaller increase of 1.8%. Underlying prices also rose 0.2% which was in line with consensus expectations. The year-on-year increase was unchanged at 1.7% compared with consensus forecasts of a slight decline to 1.6%. The perspective of higher inflationary pressures in the near future through the impact of hurricanes should favour more numbers of interest rate hikes by Fed by the end of the year (currently only one is being discounted by markets).

Let's now take a look at the US Dollar Index technical picture on the H4 time frame. The Dollar is still undervalued and sold out and the sentiment against the US currency is still definitely negative. Correction in sentiment before the next Fed meeting next week should be continued. Nevertheless, so far the golden trend line is still acting very well as a dynamic resistance as the market wasn't able to break out through the level of 92.54. The nearest support is seen at the level of 91.62.


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