ECONOMIC DATA OF THE DAY

Time	CY	Indicator	Forecast	Previous
06:45	NZD	Employment Change QoQ	0.60%	1.20%
06:45	NZD	Employment Change YoY	2.30%	2.00%
16:30	GBP	Jobless Claims Change	9.0k	0.4k

(Source: FabTrader)

OVERNIGHT NEWS

• FED SPEECH: 
• NY Fed President William Dudley said that the Fed could potentially raise interest rates as soon as next month:
• We’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further
• The market is complacent” about the need for rate hikes.
• We are looking for growth in the second half of the year that will be stronger than the first half,” Dudley said. That should be enough to support sturdy job gains and keep the Fed’s outlook intact,
• Atlanta Federal Reserve Bank President Dennis Lockhart said the economy is likely strong enough for at least one interest rate increase before the end of 2016:
• He is not locked into a particular date for the decision. Lockhart highlighted a risk he and other Fed officials have given increased attention of late - the lag in business investment. 
• He said a rebound in investment is "pivotal" to the ongoing strength of the recovery. Lockhart said his staff has been polling businesses and "heard little that would suggest a near-term reversal of the weak trend.
• Early indications of third-quarter GDP growth suggest a rebound. I don't believe momentum has stalled. I remain confident about prospects in the second half of 2016 and 2017 
• US: 
• CPI was unchanged MoM at 0.0% as expected. A 4.7% plunge in gasoline costs and a 0.2% dip in grocery items offset higher prices for shelter and medical care 
• Overall prices rose just 0.8% YoY, a sharp slowdown from the 1.4% YoY increase in January. Core prices rose 2.2% YoY (Mkt est: 2.3%) from 2.3% in June. 
• The food-at-home category sank 1.6% YoY, the largest annual fall since in more than six years. Medical-care services increased 0.5% MoM and jumped 4.1% YoY. Prescription-drug prices increased 0.9% in July and new-car prices edged up 0.2%. Shelter costs increased 0.2% MoM, a slower increase than in the prior two months and jumped 3.3% YoY.
• UK: 
• CPI accelerated to 0.6% vs expectation of 0.5%
• Input costs surged an annual 4.3 percent last month, ending 32 consecutive declines, while import prices jumped the most since 2011.
• Transport costs were the main boost to the inflation rate in July, with gasoline and second-hand cars having the largest impact
• The cost of imported materials as a whole -- which includes metals, parts and chemicals -- rose an annual 6.5 percent in July, while imported food materials jumped 10.2 percent. 

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	94.87	-0.87%	94.426 – 95.621
EURUSD	1.1276	0.86%	1.118 – 1.1323
USDJPY	100.63	-0.70%	99.54 - 101
AUDUSD	0.7689	0.47%	0.7661 – 0.7749
GBPUSD	1.3042	1.25%	1.2882 - 1.3051

(Source: FabTrader)

Commodities (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1346.05	0.34%	1340.71 - 1358.21
Silver	19.86	0.30%	19.716 - 20.1111
Oil (BRENT)	48.85	1.64%	47.9 - 49.22
Oil (WTI)	46.25	1.69%	45.34 - 46.73

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Gold posted its biggest gain in two weeks as equities and the dollar declined. Gold’s near term resistance remains at 1350-1355 and a break above the level could see Gold retests its recent high at 1375.

Oil: With a weaker dollar and voices of support continues to become stronger, oil upward momentum continues as both WTI and Brent gained about 2% each.

FOREX NEWS

• Very strong USD selling started London session and continued all night, only partly stopped by Dudley’s comments saying that the Fed could hike rates as soon as next month. 
• The pressure is on BOJ with USDJPY briefly breaking the 100 level and finishing a formation of a head and shoulder which started on June 24th. A close below 100 will be significant to reach the next target of 95.  Vice Finance Minister Masatsugu Asakawa expressed concern over the FX markets buta verbal intervention can’t stop this move.
• The large drop of the GBP since the Brexit vote has actually helped Inflation accelerate faster which was shown in the data yesterday, triggering some buying interest in the pair which closed above the important level of 1.3000. We have not broken the year-low during the past few days. The first resistance level where we should find some sellers is at 1.3050/1.3070. 
• Even after Dudley’s comments, hedge funds are buying EURUSD and seem caught short. We broke the 100d MA at 1.1229 which will now serve as a short term support level with target of 1.1400 on the topside. 
• The uptrend channel in AUDUSD that started on July 15th is still in place and we are trading at the bottom of that channel. The top of the trend is at 0.7825. 
• In Emerging Markets, The USD selling was there but not as pronounced as the past few days considering the fact that EM currencies were the main beneficiaries of the search for yields and will be the first getting hit if the Fed actually decides to hike

U.S. inflation tame despite economy gaining momentum

U.S. consumer prices were unchanged in July but a rise in industrial output and home building suggested a pickup in economic activity that could allow the Federal Reserve to raise interest rates this year.

Tuesday's economic reports came as influential New York Fed President William Dudley said the U.S. central bank could raise interest rates next month, citing a tightening labor market that he said was starting to spur faster wage growth.

"The strong housing starts and industrial output performance will bolster the Fed confidence that growth momentum has rebounded, potentially supporting the bias for a near-term hike," said Millan Mulraine, deputy chief economist at TD Securities in New York. "Nevertheless, with inflation continuing to miss to the downside, the case for caution remains strong."

July's unchanged reading in the Consumer Price Index followed two straight monthly increases of 0.2 percent, while in the 12 months through July, the CPI rose 0.8 percent after increasing 1.0 percent in June.

The so-called core CPI, which strips out the volatile food and energy prices, edged up 0.1 percent in July after rising 0.2 percent in each of the previous three months. The year-on-year core CPI increased 2.2 percent in July after advancing 2.3 percent in June.

The Fed has a 2.0 percent inflation target and tracks an alternative inflation measure which has been stuck at 1.6 percent since March.
Read More at www.reuters.com