North American Summary and Highlights 16 Jul
Overview - The USD had a volatile North American session, plunging on a report that Trump was about to fire Fed Chairman Powell, before seeing a partial recovery after Trump denied he was planning to do so.
North American session
US June PPI was weaker than expected, unchanged both overall and ex food and energy, and the USD saw a modest dip, but the USD subsequently built gains, with EUR/USD falling below 1.16. US June industrial production as slightly stronger than expected with a 0.3% increase.
The USD turned sharply negative on a CBS report that Trump had consulted Republican lawmakers about firing Fed Chairman Powell, with EUR/USD surging above 1.17 and USD/JPY falling below 147 from 148.75, particularly after a White House official was reported to say Trump was likely to fire Powell soon, and the New York Times reported that a dismissal letter had been written. However, the move was corrected though not fully reversed on comments from Trump, who while critical of Powell denied that he was planning to fire him. The USD settled with modest losses from pre-data levels, EUR/USD near 1.1630 and USD/JPY near 147.90. Other pairs had similar moves.
Trump also sated that a trade deal with India was close but Japan would probably live by the recent trade letter. The Fed’s Beige Book reported a slight increase in activity, contrasting a slight decline on June 5, but with continued tariff-related cost pressures.
European morning session
A generally quiet European morning session saw the USD very little changed, just gaining slightly against the commodity currencies and edging marginally lower against the JPY, with EUR/USD essentially unchanged. Scandis were both weaker, with both EUR/SEK and EUR/NOK up 4 figures on the morning to 11.32 and 11.94 respectively.
The main news of the morning was the higher than expected UK CPI data for June, with the headline index rising 3.6% y/y against a consensus of 3.4% and the core up 3.7% against a consensus of 3.5%. However, the rise was concentrated in goods, with services inflation falling modestly to 5.2% y/y, and the rise in goods process looks to have bene to some extent due to timing. GBP initially gained on the news, with EUR/GBP dropping 10 pips to 0.8665, but EUR/GBP finished the morning unchanged at 0.8675.