Today, the eagerly awaited December U.S. Consumer Price Index will be released. This week, the forex market’s attention is centered on this key indicator, yet the dollar exchange rate has not shown a clear direction.
The U.S. Consumer Price Index is expected to stop declining from the previous year’s +3.1% to +3.2%. Meanwhile, the Core year-on-year rate is anticipated to decrease from +4.0% to +3.8%. At this stage, there is a strong impression that inflation is stabilizing, but the actual results will determine the market’s perception. The impact of the December rise in gasoline prices and how the market factors it in will be crucial. The Dollar Index has been hovering around 102-103, and it will be interesting to see if it breaks out of this range.
The yen exchange rate is experiencing a weakening yen trend. There is a growing perception that the possibility of negative interest rate removal has diminished following the major earthquake in the Noto Peninsula. Japanese stocks are gaining popularity in the stock market, and there are speculations about new NISA fund inflows. Cross-yen pairs are also on the rise along with the USD/JPY. Depending on the results of the U.S. Consumer Price Index, there is a possibility of a short-term adjustment to the overheated yen depreciation trend, so it’s worth keeping an eye on.
Today, all eyes are on the direction of the U.S. dollar. Depending on the results, there may be potential movements in both directions, so caution is advised.”
