All major currencies in play with US CPI due today

What Happened Yesterday

The USD slumped against rivals yesterday on the back of weak factory inflation data, while the Euro enjoyed solid support after the European Central Bank hinted that it could be gearing up to trim its massive monetary stimulus.

On top of that was the lingering rumours that China maybe about to halt purchases of US Treasuries, and that’s putting further pressure on the USD.

The USD index took a solid beating as it dropped down to 91.69, it’s lowest level since Sept. 20.

The USD came under from U.S. producer prices which fell for the first time in nearly 1-1/2 years in December. This could temper expectations that inflation will accelerate in 2018 & really heightens the sensitivity of today’s US CPI data.

Against the Yen, the USD spent most of the day around it’s six-week low of 111.05. A culmination of BOJ action, Chinese rumours on Treasuries & weak US data all contributing to the downside push.

It was down a steep 1.7% for the week in which the Japanese currency soared as a routine operational reduction in bond purchases by the Bank of Japan triggered speculation that the central bank would unwind its massive stimulus.

The Euro was up 0.3% at $1.2062, approaching its nearly four-month high of 1.2089 set last week.

The Euro rallied on Thursday, after ECB policymakers said in minutes of the bank’s December meeting that they could revisit their communication stance in early 2018, boosting expectations that they are preparing to reduce their vast monetary stimulus programme.

Investors took the relatively hawkish statement as a further signal that the ECB will wind down its 2.55 trillion euro ($3.07 trillion) bond purchase scheme this year if Europe’s economy continues to hum along.

The AUD & NZD both enjoyed a nice ride to the topside on the back of the weaker USD and stronger then expected Australian Retail Sales data. Aussie retail sales bounced to +1.2% versus forecasts of a +0.4% gain.

Technical Set Up – What’s Happening with the Majors

The Majors are behaving perfectly & all correlating as they should against the USD. This generally typifies ‘good’ trading conditions.

AUDUSD

Got a boost from the retail sales data yesterday. It hasn’t gone far but looks set for higher levels. Today’s US CPI data the key from here.

Check our detailed AUDUSD Analysis

NZDUSD

The Kiwi has been building for a move to the topside and it’s finally popped. Today’s US CPI data the key from here.

Check our detailed NZDUSD Analysis

USDJPY

Continues to grind lower on weak USD sentiment & BOJ action. Today’s US CPI data the key from here.

Check our detailed USDJPY Analysis

EURUSD

The Euros gone from the out-house to the penthouse in a day. Positive ECB sentiment combined with weak USD sentiment means the Euro should keep climbing. Today’s US CPI data the key from here.

Check our detailed EURUSD Analysis

GBPUSD

Following the weak USD theme. Topside move still looks good but beware negative Brexit comments. Today’s US CPI data the key from here.

Check our detailed GBPUSD Analysis

USDCHF

The USD is driving this pair but the USD hasn’t gone as far against the Swissie as it has against the Index. Today’s US CPI data the key from here.

Check our detailed USDCHF Analysis

USDCAD

Starting to drift lower with weaker USD and stronger Oil prices. NAFTA concerns still hanging over the CAD. Today’s US CPI data the key from here.

Check our detailed USDCAD Analysis

Today’s Fundamental Drivers

What’s the Plan for Today?

The entire of focus of today is on the US CPI data.

It’s a huge number because it has massive implications for the FED and future interest rate hikes but also because it comes at a time when the USD is extremely under the pump.

All of the major currency pairs are on watch. Most of them are at critical technical levels so variant data and we’ll see a BIG move!

Weak CPI – This is our ideal result. It goes with all the current geopolitical issues plus the genral weak US data……. so it should see the USD crunched and all the other currencies rally.

This would change the FED’s outlook and set a new trend for the market …. so fingers crossed it’s a weak number!

Strong CPI – boring!!! But it will see a decent correction of the last few days moves. It will be back to status quo and normal range bound trading…. hence my ‘boring’ call.

Today’s Focus – Major Currencies in Play

You need to follow the economic data releases & best technical set ups to work out where the majority of action and interest will be.

ALL MAJORS

Technical Set Up: Focus on the Daily Trendlines for today’s US data…. some big levels about to break on topside in AUD, NZD & EUR.

Fundamental Driver: US CPI

Potential Strategy: By far and away the best opportunity will come from weak US CPI data. Focus on USD weakness and hit the pairs that have the best trendlines!

Check our Next Best Trades list for full details.

Central Bank Sentiment

ECB Minutes suggest the ECB may start tweaking their policy message in early 2018.

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance into your daily preparation.

Your Daily Analysis needs to become habitual – For full guidance on our daily routine click here.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your sucess: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad

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