Daily Market Insight for the 19th July 2023 - UK CPI surprises to the downside sending GBP lower

foreign ERS this is Brad Gilbert with the daily Market insight for Wednesday the 19th of July all right now hope everyone of those busy days where every time I came back to the screens there was something on right the Kiwi CPI numbers earlier today in Asia and now the UK CPI numbers now just focusing on the uh well actually let me just scroll back up here to the Kiwi CPI numbers tell you what I've uh got the wrong side of both of these okay CPI in New Zealand expected lower numbers they came out on the high side and uh what we saw which is actually an interesting one because we saw a uh the Kiwi Spike higher and then the strong US dollar sort of tone just swallowed it up and it drifted lower so that's a real uh kick in the guts to many of the players out there that would have gone long thinking yeah this is a great trade and with stops just below this trend line now the US dollar downtrend is not over right but we are seeing a couple of ripples here um created from the fundamentals right this is how you connect the dots so if I just come back down here now like we've just gone through the day and this is one of those good days right all these good couple of days where we've got CPI numbers coming out across the board Canadian numbers yesterday kiwi numbers now see uh UK numbers now the numbers the seven um the core CPI number 7.1 was expected okay and that was the low end of expectations of the range right the um the CPI number itself was eight I think it was 8.1 and once again that was the low end of the range so we got numbers here that were outside the range um for whatever reason the uh you didn't get the lightning bolt on metastock but that's one thing but the uh the keto actually and what we've seen okay if I just come back to the charts it's easy to show you what's happened here the uh you've seen a nice sort of clean out it was around 25 130 25 at the time of the release and it's uh you've seen a clean out down through 129.60 you know what the market was looking the way it's reacted was looking for long for strong numbers still and the way the bank of England's been talking you'd think it was it was definitely going to be stronger right and if I come over here if you have a look at the uh Sterling against a whole range of things man you can tell him what time I'm a little bit pissed off because I always actually got suckered in by the bank of England looking for stronger numbers the uh the move here okay across the board I've got Sterling Swiss up here but it's moved the same as well you're seeing Sterling just get belted it's a clean out to me this is this tells me that the market was long leading into these numbers and if anything there's a big adjustment here on the forward guidance expected from the bank of England this is going to have an impact right they've been talking tough inflation not long ago is up around 10 percent it's now under seven percent okay six point nine percent now they're a long way from cutting rates but it changes the picture it's almost like we might be getting to the end of the interest rate hiking cycle so you know what let's unload some uh some pounds and that's what we're seeing across the board here now if you haven't uh been a part of that you know what that trade is sort of on if anything it's sort of three quarters of the way over right now the U.S dollar downtrend uh is not over by any stretch I mean we've seen a stall here in the US dollar uh and that obviously coincides with Euro we're waiting for not the last piece of the puzzle but we're waiting for more fundamentals we hear from the FED next week but uh as far as the local market goes I mean as I said I was guessing like weaker numbers for the Kiwi comes out strong I'm looking for stronger numbers on the Sterling and it was all set up for a nice move there too and we get really weak numbers so you know what I'm not into necessarily trying to um do a breakout of these numbers but I'll tell you what depending on your view and aspect of the market you can uh you could have made some some serious coin here now if I just come over here just focusing on where the trading opportunities are coming up now we do have some inflation numbers coming out of the EU but these are final um numbers right so usually excuse me they've had a longer time to compile the numbers and they're usually more accurate okay or close to expectations so that's something that um you need to be aware of and if I just come bring uh is that new school yeah it is um new squawk over here okay you can see all these uh weak uh UK numbers across the board it's like this is where you get the follow through in the price action usually there's some of these that are they come out a little bit stronger but I'll tell you what CPI PPI RPI which is the retail price index all ballisted right they have just been punished so we come down to the final numbers here and as I was saying funnily enough I hadn't even had a look at this all day the final numbers out of the EU are usually spot on now the expectation is 5.5 the range 5.5 to 5.5 and the last number 5.5 it's likely not even doing the numbers they're just spitting out the uh the last outcome so that that event okay the EU numbers here it's a non-event right as you can see there's nothing much to look at one thing I would uh just have a little bit of a Bow Peep as we go into that North America session obviously the uh the crude stock numbers are a good one for you if you're looking to trade oil or potentially CAD but the U.S building permit numbers right expected 1.49 and you've got a bit of a decent range there so you know retail sales U.S retail sales figures yesterday a little bit buoyant I'm not I'm not not bad put it that way um so you want to look at these building permits because it tells you a lot about you know what what's people's confidence how much uh you know money is people got to sort of go into building permits and all these sorts of things then it has a flow on effect in the construction manufacturing jobs etc etc so just keep an eye on that number that's the only real sort of um well I get housing stats here as well uh that that's actually worth having a look at crude stocks and that's pretty much it for today as far as just fundamental data now of course we can get some left field comments usually after a uh a major release like say the UK CPI numbers right like the UK media the the renowned for being vultures they will be hounding the bank of England so give us a comment what do you think okay and they'll be like the bank of England will be sitting back going oh good we've we've done our job the pressure is off us okay and that's that's what we're looking for now just as you go into that European session uh just be aware like the the US Equity Futures are up right early in the Asian day we had a wrist on profile where uh us Equity Futures were up and these pairs down the bottom Euro stealing Aussie kiwi were going up and the dollar pairs were going down now that's reversed and it's no surprise okay that the European session is doing something different it is take taking the lead these instruments here are taking the lead from Sterling okay so as you can see it's down it's gonna haunt me all day like 93 ticks okay on the on the sort of day uh the rest of them I mean they're all against the dollar right so they just sort of follow suit and the dollar pairs are up this is pretty much based on this Sterling number and as you can see one big number in a big Center like you uh like the EU or UK it's like a US dollar impact it impacts all the major Pairs and they all follow suits so the Market's been long Euro Sterling Aussie kiwi and I've been looking for opportunities to get long because the dollar is in this downtrend after those weak U.S CPI numbers this may sort of balance things out a little bit right good taste the edge off the market so if you're trading through the uh European or North American sessions just be aware of you know the few of the things that are going on okay keep an eye on um you know where the activity is okay obviously here Sterling pair is getting blunded right it makes you feel like an idiot if you're like me looking for some stronger numbers there I should have not I didn't really assume it but uh anyway it's going to bug me for the next couple of hours the uh just be aware the dollar is is going up okay at this point and the uh the other pairs are going down so we're having a little bit of a surge in dollar strength will it last I don't know and that's where the building permits numbers come in if they come out strong it may you know add some spice to the dollar move uh just keep an eye on those U.S Equity futures for uh a bit of guidance and as you can see already right you get the Asian or the bulk of the Asian equities except China uh going up and the European Equity Futures also hitting top side right so it's a good day for um for equities is it a good day for the risk on profile not at all right because it's the dollar that's going with the equity markets which is a bit more traditional right okay guys well that's it for me get into your charts have a look around okay there's there's good trading opportunities across the board right then that's why I'm not sort of trying to like um what I call box orders I mean there's a whole different range of them but um just just follow the favorite instruments like what I want to do over the next period of time is actually get people focused on instruments that they can associate with so if you're in the UK trading Sterling against the Sterling against the dollar and the crosses it makes sense like okay same for the EU if you're in Europe maybe Sterling or Euro if you're in the US well you might have a favorite pair australasia Aussie kiwi Yin now of course the uh I don't want to lose it leave out my good friends the Canadians um so that's where you are anyway there's it's easy to focus on one band of um instruments as opposed to sort of following like the global markets and trying to trade everything okay it makes sense right if you're focusing on Sterling and you see Sterling going down well you could have been a part of that move I was focused on it didn't get it but we can actually see what happens from here and look for retracements uh look for other UK data and those sorts of things it's a bit easier just to follow one instrument than trying to follow all of them okay and that's sort of generally what I do but I've been doing this for 35 years all right guys have a good day um I'll get back to you with the sort of trading opportunities for the day tomorrow I just got a little bit caught up and I started sort of going through it and with most of the the numbers already out it didn't make sense to sort of regurgitate the outcomes all right uh and that's pretty much it alright guys have a good one cheerio