US CPI Rates in focus

The USD edged a bit lower yesterday against its counterparts, yet the overall picture of a sideways motion seems to be maintained as the US CPI rates for January are to be released. The Headline rate is expected to slow down on a year-on-year level, yet the month-on-month rate is expected to get out of the negatives and accelerate, thus forecasts allow for some ambiguity in the interpretation about the course of inflationary pressures in the US economy. Should the actual rates meet their respective forecasts, we may see the USD getting some support as the release may confirm an easing of inflation yet inflationary pressures are still simmering under the surface. Such a release may allow for the Fed to maintain its hawkish stance, despite the downshift in its rate hike path over the past interest rate decision. Should the market perceive the release indeed as supportive to the Fed’s hawkish stance that could provide some support for the greenback, while US stock markets may start weakening given that they are considered of a riskier nature.

Across the Pacific in the land of the rising sun, the Japanese Government chose academic Kazuo Ueda to be the next Governor of the Bank of Japan. Market expectations seem to be running high for the surprise pick, as despite him being considered an expert in monetary policy he was not even considered among the possible choices of the government until last week. We have to note that the market seems to place considerable hopes that the new BoJ Governor is to end the largely unpopular Yield Curve Control policy of the bank. He is not considered an ultra dove like his predecessor and on the contrary as an outsider to the central bank may be armed with more flexibility in exercising his judgment about the path of BoJ’s monetary policy. It should be noted that during today’s Asian session, Japan’s GDP rate for Q4 was released, showing a bounce from prior negative -0.8% yoy to 0.6% yoy avoiding a recession, yet the bounce may not have been as wide as the market expected, allowing for doubts to surface about the outlook of the Japanese economy and definitely the bank’s stance will be one the main factors deciding it.

EUR/USD was on the rise yesterday, breaking above the 1.0715 (S1) resistance line, now turned to support. The RSI indicator managed to surface above the reading of 50, yet nothing conclusive for the bulls. We tend to maintain our bias for the sideways motion to continue, yet note the bullish tendencies. Should the bulls actually take over we may see the pair aiming if not breaking the 1.0855 (R1) resistance line. Should the bears be in charge of the pair’s direction, we may see the pair dropping, breaking the 1.0715 (S1) support line and aim for the 1.0575 (S2) support level.

GBP/USD was on the rise yesterday breaking the 1.2115 (S1) resistance line, now turned to support. We tend to maintain a bias for the sideways motion to continue yet also note some slight bullish tendencies currently. Should cable actually find fresh buying orders along its path, we may see the pair aiming if not breaking the 1.2270 (R1) resistance line. Should a selling interest be expressed by the market, we may see the pair breaking the 1.2115 (S1) support line and aim for the 1.1925 (S2) support level.

その他の注目材料

During today’s European session, we note the release of UK’s employment data for December, Norway’s GDP rates for Q4 and Eurozone’s 2nd estimate for the GDP rate for the last quarter of last year. In the American session, besides the release of the US inflation rates for January, we note that Richmond Fed President Barkin, Dallas Fed President Logan, Philadelphia Fed President Harker and New York Fed President Williams. During tomorrow’s Asian session, we note the release of Japan’s Chain Store Sales for January, yet before that Aussie traders better be on their guard as RBA Governor Lowe speaks before the Australian Senate.