USD/JPY: Reaction of US Inflation Numbers

Forex

Summary:

Cautious stability still dominates the performance of the USD/JPY currency pair.The bulls' control of the trend will not increase, according to the performance on the daily chart below, without moving above the resistance 135.00.On the other hand, breaking the support level 131.30 will be important for control.Bears are in the trend, and whatever the results of the US inflation numbers today, I still prefer buying the currency pair from every downward level.

SELL USDJPY

Close Time

CLOSED

130.000

Entry Price

124.000

131.500

156.302 -1.112 -0.71%

150.0

Pips

Loss

124.000

131.500

Exit Price

130.000

Entry Price

131.500

Fundamentals

Markets and investors will be looking forward to the release of US inflation data on Thursday to boost the tone for risk appetite. American data occupies a prominent position in driving the markets, not only of the dollar pair against the Japanese yen, but of all currencies against the US currency. US inflation data is due at 13:30 GMT and growth is expected on a monthly basis at 0%, on a yearly basis at 6.5%, down from 7.1% in December.

If inflation is less than expected, the rest of the currencies may benefit against the dollar, but a stronger-than-expected figure could strengthen the US dollar, and it should test stronger bullish levels and compensate for its recent losses. However, markets may choose to focus more on core inflation which is expected to come in at 5.7% for December, which would be a further slowdown from the previous reading of 6.0%.

Technical Analysis

The USD/JPY exchange rate moved sideways on Thursday morning as the market waited for the crucial US inflation data. It was trading at 132.50, which was a few pips above this week’s low of 131.31. This price is also a few points above this month’s low of 129.71.

Immediate focus is now on 129.49 support in USD/JPY. Firm break there will resume whole decline from 151.93. Intraday bias will be back on the downside for 61.8% projection of 151.93 to 133.61 from 138.16 at 126.83. On the upside, however, break of 132.86 resistance will indicate short term bottoming, and bring rebound to 134.76 resistance and above.

USD/JPY: Reaction of US Inflation Numbers_1

Trading Recommendations :

Trading Direction: short

Entry Price: 130.00

Target Price: 124.00

Stop Loss: 131.50

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Economic

Summary:

U.S. CPI declined 0.1% month-on-month in December, below expectations of 0.0%. The core CPI (excluding food and energy) rose 0.3% month-on-month, in line with expectations. Over the past 12 months, U.S. CPI slowed from 7.1% to 6.5%, in line with expectations. This is also the lowest level since October 2021. Core CPI slowed to 5.7% from 6.0%, in line with expectations.

SELL USDCAD

Close Time

CLOSED

1.34233

Entry Price

1.32490

1.36150

1.43695 -0.00268 -0.19%

67.9

Pips

Profit

1.32490

1.33554

Exit Price

1.34233

Entry Price

1.36150

Fundamentals

The U.S. Bureau of Labor Statistics reported Thursday that inflation is ending 2022 on a rapid retreat, with December's consumer price index posting the largest one-month decline since the pandemic.

The consumer price index, which measures the cost of a basket of goods and services, fell 0.1% for the month, in line with market expectations. However, even with the decline, the headline CPI is still up 6.5% from a year ago, highlighting the ongoing burden of rising living costs on U.S. households.

Excluding volatile food and energy prices, the core CPI rose 0.3%, also in line with expectations.

A steep decline in gasoline prices was the primary reason for the monthly decline. Fuel oil fell 16.6% for the month, also contributing to a 4.5% overall decline in the energy index.

Food prices rose 0.3% in December, while housing prices also rose sharply by 0.8% again during the month and are now 7.5% higher than a year ago. Housing accounts for about one-third of the total CPI index.

Used vehicle prices, also an important initial driver of inflation, were off 2.5% for the month and are now down 8.8% year over year. Medical care services increased 0.1% after dropping for two straight months, while apparel prices rose 0.5% and transportation services were up 0.2% and are still 14.6% higher from a year ago. However, airline fares fell 3.1% for the month though are still up 28.5% from a year ago.

The market reacted modestly to the news and is closely watching the Fed's subsequent moves as officials battle inflation, which peaked at a 41-year high. Supply chain bottlenecks, the Russia-Ukraine conflict, and trillions of dollars in fiscal and monetary stimulus have fueled price spikes across much of the economy.

Policymakers are weighing how much further they need to go with interest rate hikes used to slow the economy and tame inflation. The Fed so far has raised its benchmark borrowing rate by 4.25 percentage points to its highest level in 15 years. Officials have indicated the rate is likely to exceed 5% before they can step back to see the impact of the policy tightening.

Following the CPI report, market pricing suggests an increased likelihood that the Fed will raise rates by 25 basis points on Feb. 1. That would mark a significant slowdown in the Fed's pace of rate hikes after four consecutive 75-basis-point increases last year.

USDCAD: U.S. December CPI Rapid Retreat Limits USD Gains and Favors CAD_1

Technical Analysis

The CAD surged after the U.S. December CPI release, as the USD fell sharply. Fresh selling pressure pushed the pair to test again the lows since the beginning of the year at 1.3347, which indicates a lack of support. The daily level and the December low at 1.3390 is a key bottom and a break below this level could lead to a bearish reversal of the pair below 1.3300. With the RSI turning down again, the consolidation area could trigger another sell-on-high behavior.

Finally, we expect trends in a range of variables to continue to favor the CAD, which is currently trading well below the fundamental equilibrium level (1.3249) indicated by our fair value model, which might limit the upside for the USD. It is recommended to short USDCAD at highs.

Trading Recommendations

Trading Direction: Short

Entry Price: 1.3400

Target Price: 1.3249

Stop Loss: 1.3615

Valid Until: 2023-01-26 23:55:00

Support: 1.3417, 1.3316, 1.3249

Resistance: 1.3450, 1.3522, 1.3615

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Commodity

Summary:

U.S. EIA crude oil inventories increased by 18.96 million barrels in the week to January 6, significantly higher than market expectations and the third largest weekly increase on record. Expectations of increased demand continue to provide some support for oil prices as economies in emerging markets get back on track. It is believed that once the current wave of infections tops out and economic activity picks up, oil prices will rise again.

BUY WTI

EXP

EXPIRED

77.000

Entry Price

84.900

72.500

69.447 +0.305 +0.44%

Pips

EXPIRED

72.500

81.125

Exit Price

77.000

Entry Price

84.900

Fundamentals

The latest EIA inventory report showed a surprising increase in inventories. The market had previously expected a 2 million barrel decrease, but the actual report showed an increase of 18.96 million barrels. WTI crude oil resumed its rally as risk appetite returned on hopes of the reopening Chinese economy. At the same time, investors seem less willing to see the explosive economic reboot that crude bulls are hoping for. This is because a sharp rise in prices may push up their trading costs.

The upcoming U.S. CPI report for December could spur oil prices later today as it will influence hopes for Fed tightening and overall market sentiment. Strong data could reinvigorate expectations for more rate hikes, which could put pressure on oil prices.

In terms of the market, the crude oil market closed sharply up 3% overnight. Market trading logic is focused on the expected strengthening of the Chinese economy, driving up global crude oil demand. The market's current disagreement is centered on whether Chinese demand can materially strengthen and whether the Fed's monetary policy is turning. Powell said on Tuesday that the inflation storm is not over and monetary policy will not turn easily.

Today the U.S. will release CPI data for December, and the market is currently expecting inflation growth to slow to 6.5%, compared to the previous value of 7.1%. If the data is in line with expectations, the market will tend to slow down interest rate hike expectations, which will play a supportive role in the crude oil market.

In addition, the inventory data is relatively bearish. Although the crude oil storage increased by 18.96 million barrels last week, which is the third largest weekly increase on record and the largest increase since February 2021 when inventories rose by a record 21.6 million barrels, the sharp increase in inventory data suppressed the rebound space of crude oil. However, we suspect that the sharp increase in crude oil inventories was caused by some refinery outages. Once refineries resume operations, the inventory numbers will slow down sharply.

WTI: Markets Ignore Record Inventory Report, Bull Correction May Set off Again_1

Technical Analysis

WTI crude oil is starting to trend higher in its short-term time frame, forming higher lows and higher highs connected by a rising channel. Price is now topping out at resistance and the bull correction may set off from here.

Applying the Fibonacci retracement tool shows that the 61.8% level is closest to the bottom of the channel around the $75.68 per barrel mark, which might be the line in the sand for a correction. A shallow pullback could be met with lower buying near the middle of the channel at $76.50 per barrel.

Stochastic is in the overbought region to reflect exhaustion among buyers, so turning lower would mean that selling pressure is kicking in. The oscillator has plenty of room to move south before reaching the oversold territory.

Similarly, RSI looks ready to turn lower after some time in the overbought region, so prices could follow suit as bearish pressure returns.

However, in the broader trend, the 100 SMA is still below the 200 SMA, indicating that the path of least resistance is to the downside or that selling pressure will continue to be in play. At the same time, the gap between the indicators is narrowing to reflect slower bearish momentum and a potential bullish crossover. It is recommended to buy the dips.

Trading Recommendations

Trading Direction: Long

Entry Price: 77.00

Target Price: 84.90

Stop Loss: 72.50

Valid Until: 2023-01-26 23:55:00

Support: 76.71, 75.90, 74.28

Resistance: 79.27, 81.45, 83.31

Risk Warnings and Disclaimers

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Saif

Forex

Summary:

USA Inflation rate expectation leads the market.

SELL USDCAD

Close Time

CLOSED

1.33759

Entry Price

1.32470

1.34686

1.43695 -0.00268 -0.19%

92.7

Pips

Loss

1.32470

1.34689

Exit Price

1.33759

Entry Price

1.34686

Fundamental analysis

Today we have the inflation rate CPI With lower expectations than the previous month and that consider harmful for the US dollar because it could lead the Federal Bank to lower the interest rate to 0.25, On the other hand, We don't have that high impact news coming this week in the Canadian dollar.

U.S. CPI YoY

Previous 7.1%

Expected 6.6%

Technical analysis

We see in the four-hour diagram chart, the pair is trending down after the NFP day and the market pull up to touch the 20 moving average. We see weakness in the price and the moving average is pointing down, we expect the price keeps moving down to the Previous demand zone at 1.32200.

Trading Recommendation

Trading Direction: Short

Entry Price: 1.33759

Target Price: 1.32470

Stop Loss: 1.34686

Risk Warnings and Disclaimers

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Damon

Commodity

Summary:

At present, the price of gold has partially absorbed the expectation that U.S. inflation may slow down, and further upwards need to exceed expectations.

SELL XAUUSD

Close Time

CLOSED

1910.00

Entry Price

1850.00

1940.00

2623.41 +28.97 +1.12%

300.0

Pips

Loss

1850.00

1940.15

Exit Price

1910.00

Entry Price

1940.00

Fundamentals

The market expects U.S. CPI data to show a slowdown in inflation, and the U.S. dollar runs weakly at a low level in the past seven months, supporting gold prices. As the performance of the first two CPI data in the United States was weaker than expected, the price of gold rose by nearly $50 and more than $30 respectively on that day. If the U.S. CPI data in December fail to meet the expectations again in the evening, the price of gold may rise above the 1900 mark, which obtains more possibilities at present.

Slightly different from the previous two CPI data released, the price of gold has partially absorbed the expectation that U.S. inflation may slow down, which has been priced in. In addition, the signals sent by Federal Reserve officials were basically in line with market expectations at that time. However, at present, it is generally expected that the Federal Reserve may cut interest rates this year, with Fed officials generally preferring to cut interest rates until 2023.

Investors need to beware of the "boots landing" market where gold prices rise first and then fall or rush up and fall. Besides, this trading day coincides with a number of Federal Reserve ticket committees making speeches. If Fed officials continue to make hawkish speeches, they may also limit the room for gold prices to rise or even cause market reversal.

What's more, investors need to pay attention to the possibility that the U.S. CPI data in December will meet expectations or exceed market expectations. In both cases, the gold price will face a certain downside risk in the short term. In addition, the change in the number of Initial Jobless Claims in the United States will be released in the evening, which also needs attention.

Technical Analysis

Judging from the daily chart, the MACD has formed a golden cross, and the moving averages express a multiple arrangement, with the short line biased towards the long. Meanwhile, the gold price is expected to test the resistance near the 1900 integer mark. In the short term, there is still some resistance near Wednesday's high of 1886.65 and May 6, 1892.40. The strong resistance is near the 1920 mark, which is also the location of the high resistance on April 29.

In view of the fact that MACD extends the negative divergence signal and is currently running to the overbought zone, the Doji Candlestick was recorded on Wednesday It is still necessary to beware of the risk of gold price peaking in the short term. The initial support below is around the MA5 of 1874.28, and the strong support is around the MA10 of 1853.64. If it retreats to this position, the short-term peak signal will be strengthened. XAUUSD：Inflation Data Is Coming, and the Long-Short Turning Points Are Competing._1

XAUUSD：Inflation Data Is Coming, and the Long-Short Turning Points Are Competing._1

Trading Recommendations

Trading Direction： Short

Entry Price：1910.000

Target Price：1850.000

Stop Loss：1940.000

Support：1853.320/1827.500

Resistance：1886.000/1920.000

Risk Warnings and Disclaimers

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Ricardo Nguyen

Forex

Summary:

The dollar weakened slightly against the yen down about 0.72% to 131.46, the lowest two days before. A poll showed that the BOJ will evaluate the side effects of easing monetary policy.

SELL USDJPY

EXP

EXPIRED

131.965

Entry Price

129.700

132.967

156.302 -1.112 -0.71%

Pips

EXPIRED

129.700

129.785

Exit Price

131.965

Entry Price

132.967

Fundamentals

The yen rises on news of BOJ policy review.

As the BOJ will evaluate the side effects of easing monetary policy, the yen gains on Thursday.

At its December monetary policy meeting, the BOJ unexpectedly adjusted its bond yield curve control policy, but the move did not solve the market distortions.

Saktiandi Supaat, regional head of foreign exchange research and strategy at Maybank, said, "The latest report could boost optimism (for the yen). The new governor of BOJ may trigger expectations of policy changes."

Technical Analysis

The BOJ’s Monetary Policy May Change: USDJPY Tumbles by More than 40 Points_1

In the H4 chart, USDJPY is a downtrend and the yen has retested the resistance level at 134.5. Market structure is slipping and moves by the central bank to ease monetary policy also helping the yen rise and restraining the dollar.

The BOJ’s Monetary Policy May Change: USDJPY Tumbles by More than 40 Points_2

In the H1 chart, the yen retested the resistance level but then rolled back, with 134.5 acting as strong resistance at this time.

The yen is moving towards the support zone at 131.323, where it could react and break out to find the potential zone at 129,514.

Trading Recommendations

Trading Direction: Short

Entry Price: 131.965

Target Price:129.700

Stop Loss: 132.967

Support: 131.323, 129.514

Resistance: 132.757, 134.751

Risk Warnings and Disclaimers

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King Ten

Commodity

Summary:

The pace of global economic growth is expected to be depressed first and then rise. Copper prices, as a barometer of the economy, may also be low at the beginning and rise later.

SELL COPPER

Close Time

CLOSED

9113.000

Entry Price

8200.000

9500.000

8958.650 +76.700 +0.86%

38700.0

Pips

Loss

8200.000

9500.005

Exit Price

9113.000

Entry Price

9500.000

Fundamentals

From the supply side, global copper production has gradually recovered since 2022 as the impact of the pandemic waned. ICSG data show that from January to October 2022, global copper production from copper ore was 18.04 million tons, up 3.4% YoY of which, copper production from concentrate was 14.67 million tons, up 3.1%YoY, and copper production from the wet process was 3.37 million tons, up 3.1% YoY. During the same period, copper production in Chile was 4.38 million tons, down 5.6% YoY, copper production in Peru was 1.96 million tons, up 2.1% YoY, and copper production in the DRC was 1.76 million tons, up 27.5% YoY. Looking ahead to 2023, the global copper mining capacity is still expanding, but the current risk events in Latin America, mine production disruption factors increased significantly, if such events occur again to affect the normal operation of existing mines and the expansion and stabilization of new mines, the balance of copper ore may turn into a shortage again. Therefore, the stability of the supply side remains the main factor plaguing copper ore supply in 2023.

Regarding the demand side, from January to October 2022, global refined copper consumption was 21.5 million tons, up 2.7% YoY. Among them, China's copper consumption was 11.89 million tons, up 4.5% YoY. Besides, the EU and the UK refined copper consumption was 2.67 million tons, up 3.2% YoY. In addition, in countries such as Malaysia, Vietnam, Thailand, and India, refined copper consumption grew 21.5%, 6.8%, 3.2%, and 7.1% YoY respectively. It is expected that refined copper consumption in these countries and regions is expected to keep growing as the manufacturing industry shifts. Previewing 2023, the high growth of the new energy industry will form effective support for copper consumption in the short term, while traditional household appliances, communication electronics, and other industries are difficult to form effective support in the short term due to the global economic weakness, coupled with the transfer of manufacturing to Southeast Asia. Meanwhile, policy conduction takes time, domestic copper demand is not expected to grow too much in the short term, and the long-term demand is determined by the policy support strength for the real estate market.

In general, from a historical perspective, supply and demand fundamentals and costs determine the long-term price trend, but it is not the only factor. In many cases, the financial attributes of copper are the hot spot for market speculation, resulting in a certain lag in the impact of fundamentals on the market. Moreover, the short-term ups and downs are driven by financial attributes and the recent rise in copper price results from the fact that China's pandemic prevention and control reached a new phase. Also, favorable policies on real estate, as well as short-term demand speculation due to the geopolitical changes are supporting copper to surge further. Nevertheless, copper will return to the commodity fundamentals after speculations. In 2023, global economic growth continues to diverge, with Europe and the United States slowing down and facing the risk of recessions, and the domestic economy returning to a normal growth track in the context of the pandemic release, the global economic growth is expected to depress and then rise, copper prices, as a barometer of the economy, may also be low at the beginning and rise later.

Technical Analysis

Regarding the daily chart, copper appreciated from 8200 on January 5th to near 9180 by almost 1000, or 12%. Under current sentiment, copper forms 5 consecutive bull candles, while the previous bears at 8200 may have faded. Furthermore, the pull-up demand from bulls may be weakened, followed by taking profits, which has been shown during today's trading. At present, copper is running at the upper area of the channel, and it is better to keep an eye on a retracement. COPPER: Long-term Copper Will Be Linked with Demand/Supply Despite Short-term Financial Speculation_1

COPPER: Long-term Copper Will Be Linked with Demand/Supply Despite Short-term Financial Speculation_1

Trading Recommendations

Trading direction: Short

Entry price: 9113

Target price: 8200

Stop loss: 9500

Support: 8500/8200

Resistance: 9200/9500

Risk Warnings and Disclaimers

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Data

USD/JPY: Reaction of US Inflation Numbers

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Technical Analysis

U.S. December CPI Rapid Retreat Limits USD Gains and Favors CAD

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Is USDCAD Going Down bBased on CPI?

Fundamental analysis

U.S. CPI YoY

Previous 7.1%

Expected 6.6%

Technical analysis

Trading Recommendation

Inflation Data Is Coming, and the Long-Short Turning Points Are Competing.

Fundamentals

Technical Analysis

Trading Recommendations

The BOJ’s Monetary Policy May Change: USDJPY Tumbles by More than 40 Points

Fundamentals

Technical Analysis

Trading Recommendations

Long-term Copper Will Be Linked with Demand/Supply Despite Short-term Financial Speculation

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure