- 24.01.2022 02:30 pm
- 24.01.2022 02:15 pm
- 21.01.2022 09:45 am
Summary: Fed Chair Jerome Powell stated that the Federal Reserve should be able to raise interest rates without damaging the job market in hearings before the US Senate. The Dollar eased against its Rivals with the Canadian Loonie outperforming. Oil prices soared an average of 4% while Gold and Silver climbed above 1%. The Dollar Index (USD/DXY), which measures the value of the Greenback against a basket of 6 major currencies, settled 0.37% lower to 95.62 (95.89 yesterday). The US Dollar lost 0.66% against its Canadian counterpart (USD/CAD) to 1.2582 from 1.2662. In late New York trade, Sterling (GBP/USD) rallied 0.35% to 1.3627 from 1.3587 while the Euro (EUR/USD) was up at 1.1367 from 1.1340, up 0.36%. Stronger commodity prices lifted the Australian Dollar to 0.7210 (0.7182) while the Kiwi (NZD/USD) gained 0.27% to 0.6783 from 0.6765 yesterday. Against the Japanese Yen, the Dollar (USD/JPY) was little changed at 115.35 from 115.30 yesterday. The Greenback slumped against the Asian and Emerging Market currencies. USD/THB (Dollar-Thai Baht) slid to 33.30 from 33.57 while the USD/SGD pair (US Dollar-Singapore Dollar) dipped 0.40% to 1.3505 (1.3552). Global bond yields were steady. The benchmark US 10-year Treasury yield settled at 1.75% (1.76% yesterday). Two-year US bond rates were unchanged at 0.90%. Germany’s 10-year Bund yield rose to -0.03% from -0.04% yesterday. Japan’s 10-year JGB rate was last at 0.14% (0.13% yesterday).
Data released yesterday saw UK BRC Retail Sales climb 0.6%, beating estimates at 0.3%. Australia’s December Retail Sales jumped 7.3% from the previous month’s 4.9%, beating forecasts at 3.5%. Australia’s Trade Balance dipped to +AUD 9.42 billion from a downward revised +AUD 10.78 billion from +AUD 11.22 billion previously. Japan’s Leading Indicators climbed to 103.0%, bettering expectations of 102.9%. Italy’s Retail Sales fell to -0.4% from +0.2%, missing estimates at 0.3%. The US IBD/TIPP Economic Optimism Index eased to 44.7 from 48.4.
On the Lookout: Today’s economic calendar sees the release of crucial Chinese and US inflation data. Japan kicks off with its Reuters January Tankan Manufacturing Index (no f/c, previous was 22), Japanese Annual Bank Lending report for December (no f/c, previous was 0.6%, Japanese November Current Account (f/c +JPY 585 billion from +JPY 1018.7 billion – ACY Finlogix). Japanese markets will be closed today, celebrating this Coming-of-Age Day. China follows with its December CPI (m/m f/c 0.2% from 0.4%; y/y f/c 1.8% from 2.3% - ACY Finlogix). Chinese December PPI follows (y/y f/c 11.1% from 12.9%). Japan releases its Eco Watchers Current Survey for December (no f/c, previous was 56.3). Germany starts off Europe with its December Wholesale Prices (m/m no f/c, previous was 1.3%; y/y no f/c, previous was 16.6% - ACY Finlogix). China releases its December New Yuan Loans (f/c CNY1250 billion from previous CNY 1270 billion – ACY FInlogix). The Eurozone release its November Industrial Production (m/m f/c 0.5% from 1.1%; y/y f/c 0.6% from 3.3% - ACY Finlogix). Finally, the US releases its December CPI (m/m f/c 0.4% from 0.8% - ACY Finlogix), US December Core CPI (m/m f/c 0.5% from 0.5% - ACY Finlogix), US December Annual CPI (y/y f/c 7% from 6.8% - ACY Finlogix), US December Annual Core CPI (y/y f/c 5.4% from 4.9% - ACY Finlogix).
Trading Perspective: Last night’s US Dollar performance suggests that it is in a corrective mode. The strong Dollar story is still intact, but the speculative market is carrying long USD bets. Unless we see much stronger than forecast US inflation data, its difficult to see significant, broad based USD gains versus its Rivals. That’s the sense I get from the price action this week. It’s still early days and traders looking for big moves need to be patient. Keep an eye on the US December Annual Core inflation number. Forecasts are for a rise to 5.4% from the previous 4.9%. A rise of 5.6% or higher could ignite a powerful Dollar rally. Watch the US bond yields too. The US 10-year note rate closed at 1.75%, its highest in almost a year. A break above 1.80% could see 2.0%. Which would lift the Dollar Index (USD/DXY) to the 96.00-20 area. A disappointing Annual Core CPI read of say 4.9% or lower will see more specs unwind USD longs. The USD/DXY would tumble to 95.30-50 support levels. Happy days, we could be in for some fireworks later.
Have a good trading day ahead, happy Wednesday.
This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
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