Russell Shor

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).

The hourly chart is bullish. EURUSD’s EMAs have crossed up (black ellipse), as has its momentum based stochastic (aqua ellipse). A movement by stochastic to the 80+ area (blue arrow) will denote an underlying positive momentum. Holding in this area will suggest that the shorter-term traders are aligning with the daily bullish participants.

The daily CHN50 chart is trading in its bullish area between the upper blue and red bands. Maintaining the upper channel increases the likelihood of price appreciation. The red Bollinger bands are moving in opposite directions, which shows a growing volatility. The hourly chart shows the stochastic has crossed up (aqua ellipse). A move towards the 80+ region (blue arrow) will suggest a positive momentum. A cross by the trend-following…

The monthly chart of FXCM’s CHN50 CFD is showing value tendencies. It spent 12 months in its bearish channel (notwithstanding a temporary spike in June 2022), between its lower blue and red bands. The current candle is attempting to move into its neutral channel between the blue bands (green vertical rectangle). This is bullish. The monthly RSI still needs to cross above 50 into the indicator’s bullish area (blue arrow).…

- Friday’s NFP. - Job data shows deceleration in job growth, moderation in wages, participation rate ticked up. - Services PMI. - PMI shows contraction. US is a service-based economy. First time since June 2020 it contracted. - Factory Orders biggest decline since June 2020. - FOMC minutes were hawkish, no member sees rate cut this year. - December CPI is released on Thursday. Most likely moderated, but all eyes…

FXCM’s Brent and WTI CFDs, UKOil and USOil, have moved into their neutral zone between the blue bands. This is a movement of strength. China is opening its borders for the first time in 3 years. This is part of its new Covid-19 policy.

Friday’s job report showed a slowdown in job growth and a moderation in wage inflation. In response, the US 10-year real rate declined, with the greenback following.

NFP Live Trade - 01 January 2023

Yesterday, the USDOLLAR pushed into its bullish channel between its upper blue and red bands (blue rectangle). The RSI also crossed into its bullish area above 50 (green rectangle). The greenback rallied on the strong ADP data, which pushed the US 2-year yields up around 11bps

The US30 dropped 165 points yesterday. This followed the ADP surprise to the upside, showing 235K jobs were created (153K - forecast). This prompted renewed rate hike fears, given the Fed concern over wage inflation.