iFOREX Daily Analysis : October 16,2017

 | Oct 16, 2017 05:28AM ET

The dollar fluctuated between gains and losses on Friday after mixed consumer inflation data gave no signs on whether another rate increase will take place by the Federal Reserve in the coming months.

Consumer prices rose 0.5% last month after advancing 0.4% in August the Labor Department reported Friday. Economists had forecast a 0.6% increase. It was the largest increase in eight months, but was mainly driven by soaring gasoline prices after hurricanes hit the southern U.S.

The euro was slightly lower, after European Central Bank President Mario Draghi said the euro zone still requires substantial monetary stimulus as inflation remains weak.

Sterling was stronger ending the week 1.7% higher, after suffering its worst week in a year, on hopes that Britain could be offered a two-year Brexit transition deal.

Instability and concerns arise once more in the oil markets as Iraq, the second biggest oil producer within the Organization of the Petroleum Exporting Countries (OPEC) began moving toward oil fields and an important air base held by Kurdish forces near the oil-rich city of Kirkuk.

The price of bitcoin soared, approaching the $6,000 level on Friday, however, criticism against it continues. Jamie Dimon, chief executive of JP Morgan Chase (NYSE:JPM), unleashed another statement saying that he believes blockchain technology is useful but that non-fiat cryptocurrency “has no value.”

Later in the week, investors will be watching closely on data from the U.S. housing sector to assess the economic impact of the hurricanes which hit the southern U.S. last month. Third quarter GDP data from China will also be closely watched together with UK inflation amid speculation over a possible rate hike by the Bank of England as soon as next month.

EUR/USD

The euro is under pressure on Monday on concerns over Catalonia's confrontation with Madrid, however, the dollar is also weakened after the weak U.S. inflation data.

Catalan leader Carles Puigdemont has until 10:00 a.m. local (0800 GMT) on Monday to clarify whether he is calling for the region's independence. Prime Minister Mariano Rajoy has given him the Monday deadline to clarify his position.

The drop in the single currency was limited as investors expect the ECB to present a plan later this month for tapering its bond buying program.

Today, the U.S. is to release data on manufacturing activity in the New York region.