US consumer prices posted the largest increase since February 2013 last month amid higher gasoline prices, keeping the Federal Reserve on course to raise interest rates further this year. The US Commerce Department reported on Wednesday its headline CPI climbed 0.6% month-over-month in January, while analysts expected the Index to remain unchanged from the prior month at 0.3%. Excluding volatile items, core consumer prices rose 0.3% last month, after growing 0.2% in December. The January inflation jump was mainly driven by higher gasoline, apparel and motor vehicles prices. On Tuesday, the Fed Chair Janet Yellen said the Bank would probably raise rates at its next policy meeting.
Other data released by the Commerce Department on Wednesday showed retail sales advanced 0.4% in January after surging 1.0% in the previous month. However, analysts anticipated an increase of just 0.1% in the reported month. Furthermore, data showed core retail sales climbed 0.8% last month, following December's upwardly revised increase of 0.4%. A 1.6% rise in sales at electronics and appliances stores, the largest since June 2015, contributed the most to retail sales growth in January. Back in December, these stores posted a 1.1% drop in sales. In the meantime, automobile sales dropped 1.4%, the largest fall since March 2016, last month after surging 3.2% in December.
Upcoming events: Various US data in the noon
Europe is quiet on Thursday, with the exception of ECB Monetary Policy Meeting Accounts at 12:30 GMT. However, this is not a data release of much interest to volatility traders, as it is not usable for fundamental correction scalping. However, traders have to keep their attention at its highest at 13:30 GMT. At that time a US data package will be released. The package will consist of US Building Permits; Philly Fed Manufacturing Index, US Unemployment Claims and, in addition, the US Housing Starts. Stay tuned into Dukascopy Live Webinars to see the coverage of the release.
EUR/USD continues rebound on Thursday
Daily Chart: During the early hours of Thursday's trading session the common European currency surged against the US Dollar. The currency exchange rate was continuing the rebound, which began during the second part of Wednesday's trading session. In addition, due to the fact that the pair managed to break through the resistance put up by the 55-day SMA at 1.0602 level, it is most likely that the surge will continue up to the monthly PP, which is located at 1.0650 level. However, it is unlikely that the monthly PP's resistance will be broken, as it is also strengthened by the 20-day SMA at 1.0657.SWFX traders become bullish
Traders are firmly bullish on the pair, as 53% of trader open positions are long. In the meantime, SWFX trader set up pending commands are bearish, as 60% of trader set up orders are set up to sell the common European currency.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.07 in May
Traders, who were questioned on their longer-term views on EUR/USD between January 16 and February 16 expect, on average, the currency pair to trade around 1.07 by the middle of May. In general, 50% (-2%) of participants believe the exchange rate will be generally below 1.06 in ninety days, and 24% see it below 1.02. In the meantime, 21% (+3%) of those surveyed reckon the pair will trade above 1.12 in three months.