The USD has whipped around after the CPI data. The dollar moved higher immediately after the release and then moved lower, and then bounced marginally higher. The headline came out weaker at -0.1% putting the 6 month average at less then 2% if you annualize the 6 month average MoM gain. The ex food and energy was as expected at 0.3% as expected.
Internally, the shelter index moved up 0.8% on the month. The expectations is that will ease over time. This does not seem to reflect reality but…..
Services less energy was up 0.5% suggesting it is still an issue, but with shelter increasing, will that move lower going forward? Energy tumbled -4.5%.
US stocks are higher, but volatile. Futures are implying:
- Dow up 117 point
- S&P up 13.5 points
- NASDAQ index of 50 points
Looking at some of the major currency pairs:
EURUSD : The EURUSD moved higher ahead of the report moving up to 1.0810 and then tumbled to 1.0728 on the headline news. The price then retraced all that decline back up to 1.0815 before moving back down to 1.0768. The currently price is back above the 1.0800 level. What an up and down wild ride.
The Pair is above the high ceiling for the week at 1.0775 and above the 1.0800 level. Looking at the daily chart, there is a swing area between 1.07468 and 1.0805. Get and stay above the 1.0805 level will now be eyed. The market is trying but there is also some slowing near this swing area too. The buyers and sellers are engaged and in a fight at the high of the key swing area barometer.
EURUSD moves up to the upper extreme of swing area
USDJPY : The USDJPY is down testing the low from January at 129.498. The low reached 129.524 so far. Looking at the daily chart belwo, the pair had lows in August at 130.38 and then in December at 130.52. Earlier in January, both those levels were broken on the way to the low at 129.498. Watch the 130.38 level on the daily now as risk. Stay below is more bearish. On the downside on the daily, the 61.8% of the 2022 trading range at 128.16 is the next target.
Overnight the USDJPY moved lower on the back of hope that the Bank of Japan would do something next week at their next policy meeting. Recall that in December they raise the 10 month yield target to 0.50% from 0.25%. More tightening policy by the Bank of Japan would put pressure on the USDJPY.
USDJPY tests the January low
GBPUSD: The GBPUSD moved sharply lower and has since rotated back higher. The pair is moving to the highest level since December 19 when the price peaked at 1.2241.. The high price today reach 1.21415. Getting above that level would increase the bullish bias technically. The 61.8% retracement of the move down from the mid-December hide to the January low comes in at 1.22145 and that is being tested now on the dip. The high price from Monday’s trade was at 1.22091. That level will also be eyed for close support intraday. Best case scenario for the buyers is the price bounces off the 1.2209 level (stay above 1.2200).
GBPUSD moves into a topside swing area.