Uncle Sam’s inflation numbers are up today!
Will the release affect the Fed’s plans for tomorrow or nah?
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/JPY’s short-term uptrend for pullback opportunities. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
BOC Gov. Macklem reiterates “greater risk” of under vs. overtightening monetary policy
US Justice Dept charges SBF with wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering
FTX founder Sam Bankman-Fried arrested in Bahamas
Westpac: Australia consumer sentiment improves from 78.0 to 80.3 in December
AU NAB business confidence index fell 4 points to -4 in November amid rising inflation and higher rates
REINZ: New Zealand house prices fall as interest rates bite
Swiss gov’t expects economic slowdown in 2023 but no recession
Oil climbs as U.S. pipeline closure adds to supply uncertainty
UK jobless rate edges up from 3.6% to 3.7% in the three months to October
UK’s real wages down by 2.7% (3m/3m) in October despite 6.1% wage increase
European shares edge higher ahead of U.S. inflation data
Germany’s ZEW economic sentiment at 10:00 am GMT
Eurozone’s ZEW economic sentiment at 10:00 am GMT
BOE’s FPC statement at 10:30 am GMT
BOE Gov. Bailey to hold a presser at 11:00 am GMT
US CPI reports at 1:30 pm GMT
RBA Gov. Lowe to give a speech at 10:30 pm GMT
Japan’s core machinery orders at 11:50 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/JPY
The major currencies saw limited volatility during the Asian and early European sessions as traders await the U.S. CPI report.
Word around is that we’ll see further slowdown in both the headline and core CPI numbers.
If we do see softer consumer price growth, then traders will feel more confident that the Fed will soon wind down its tightening plans.
USD could drop across the board and USD/JPY, which is knocking at the top of an ascending triangle pattern, could dip back to the pattern’s support zone.
It could even break its trend line support if USD/JPY’s December buyers decide to unwind their positions ahead of tomorrow’s FOMC event!
Surprisingly strong inflation records, on the other hand, would break the slowdown pattern in the last few months.
Anticipation of higher terminal rates or a longer period of high interest rates could boost USD higher against JPY.
USD/JPY could make new December highs by breaking above the 137.85 resistance area and retest the 140.00 psychological level.