The US consumer price index for December will be released today. The advance forecast is +6.5% from the previous year, and the core is +5.7% from the previous year. The movement of the market at the time of the announcement is likely to be determined by the strength of the advance forecast. In other words, if it is stronger than expected, it will buy the dollar, and if it is weaker, it will sell the dollar. If there is a large discrepancy between the forecast and the results, there is a high possibility that the direction of the initial reaction will be maintained even after that.
“What is the current market sentiment?” Recently, there is widespread speculation that inflationary pressures will ease considerably, given the slowdown in wage growth in the U.S. employment statistics and the more-than-expected drop in the ISM non-manufacturing index. The pace of interest rate hikes at the US FOMC is expected to settle down to 25bp, and there is pressure on stock prices and dollar selling.
We would also like to pay attention to price movements in the London market before the announcement. Given that the market is heavily priced in advance, dollar buying for short-term position adjustments and last-minute dollar selling by laggards are likely to mix.
For the dollar-yen exchange rate, the Bank of Japan decision meeting on the 18th of next week also overlaps. According to Yomiuri Online, it is reported that the Bank of Japan will examine the side effects associated with large-scale monetary easing at its meeting next week, and the situation is likely to lean toward yen buying. The dollar/yen pair has hit a low of 129.52 at the beginning of the year, and it will be a point of interest for the lower price.
The BOJ report came as a complete surprise, and strong yen-buying is underway amid the stalemate in front of the US CPI. However, as in the previous example, there is a possibility that the headline will return soon, so we decided that it would be too risky to chase it from now on, so we have not touched on the current JPY buying.
Today’s main topic is the US Consumer Price Index (CPI) . I believe that following the movements of the USD after this is the easiest way to make a profit. If USD selling progresses, the aim is to buy GOLD, EURUSD, or GBPUSD.