Currencies

The pair showed signs of life as the BoJ did not build on December’s policy surprise, but the technical death cross and market optimism for a Fed pivot weigh on the greenback

Australian inflation for the quarter came in higher than expected at 1.9% (1.6%). On an annualised basis, CPI was 8.4% (7.6%: forecast). The q/q and y/y numbers were also higher than their respective previous prints.

The Fed is in its blackout period prior to the 1 Feb FOMC statement and interest rate hike. This week started with a prevailing uncertain sentiment.

GBPUSD is trading in its bullish channel, between the upper blue and red bands, on its daily time frame. The longer it maintains this position, the greater the likelihood of further price appreciation. The hourly chart has also turned positive. Its trend-following EMAs and momentum based stochastic have both crossed up (black ellipses). The stochastic moving into its upper quintile and holding (blue arrow) will connote an underlying momentum. This…

From July 2022, the basket has drifted sideways in an accumulation pattern (green rectangle). It has now crossed above its 30-week EMA and the EMA has turned up. This is bullish. The RSI has moved above 50 (blue rectangle), connoting an underlying bullish momentum. The longer this maintains, the greater the chance of further appreciation ahead.

The pair extends this year’s gains as UK headline CPI inflation moderated further in December and the core persisted, while hopes for a Fed pivot continue to create headwinds for the greenback

The volatility for USDJPY increased after the Bank of Japan kept its interest rate targets unchanged. It left its short-term interest rates at -0.1% and the target for its 10-year bond at zero. The BoJ reiterated it will defend the 10-year yield at 0.5%.

The pair set new eight months earlier, but finds support, as markets gear up for Wednesday’s monetary policy decision by the central bank of Japan

The pair is having a good week on expectations of a less aggressive Fed, but loses steam today, as markets brace for the US CPI inflation update that can affect the central bank’s next move

The USDOLLAR is trading in its bear channel, between the lower blue and red bands, ahead of tomorrow’s CPI release. Its RSI is also on the bearish side of 50.

Australian headline inflation printed at 7.3% y/y. This was higher than the expected 7.2% y/y and more than the last months 6.9% y/y. After two months of declines, food prices pushed higher. Poor weather was much to blame and is largely reflected in the increase in fruit and vegetable prices. Motor fuel was another larger contributor up 5.6% m/m (it was also up 7% m/m for October).