Two big US data points could bring relief for today’s dollar selling
It’s all about the data this afternoon as we get the latest news on inflation and the fortunes of the US consumer. Here’s the numbers first
CPI (Dec 2017)
- CPI 2.1% exp vs 2.2% prior y/y
- Core 1.7% exp vs 1.7% prior
- Real average weekly earnings 0.1% exp vs 0.1% prior m/m
- 0.8% prior y/y
- Real average hourly earnings 0.2% prior y/y
Retail sales
- 0.4% exp vs 0.8% prior m/m
- Ex-autos 0.4% vs 1.0% prior m/m
- Ex-gas/autos 0.8% prior m/m
- Control group (core) 0.4% exp vs 0.8% prior m/m
Here’s the deja vu. When I do these mini previews I look up the old posts to familiarise myself with what happend then. This was my headline ahead of last month’s numbers Can the upcoming US retail sales and CPI reports change the tide for USDJPY?
My view today pretty much mirrors what I wrote last month;
What’s on my mind is how we match the data against today’s FX moves. USDJPY seems under constant pressure and bad numbers could be the straw that breaks the camels back. On the other side, will good numbers bring a complete about change or will it be seen by sellers as an opportunity to hit a rally?
That’s pretty much what I was going to write today, so that’s saved me some typing.
I’ll even C&P my view on the reaction and just amend the levels;
On balance, I see a greater chance of USDJPY falling and/or being sold on a rally, than I do seeing these intraday moves turning around completely. At best it might put a temporary floor in but if any rally can’t break above
113.25111.40, and more importantly 111.80/90, it will be in trouble.
As always, look for a 2pp varitation in CPI to gauge the size of any moves (less than 2pp smaller move, 2pp or over, bigger move). Retail sales can be a wild card so judge CPI first before retails.
Probably the easiest preivew I’ve ever done. Same again next month? 😉
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Looking across the spectrum , my view is there are some real USD sellers around these days, Even cable is bid… Seeing how EURUSD took and held the 1.2100 barrier level tells a story. If it would have been a trigger, dragging only short termers into the trade, we would have seen a reversal as the barrier got hit, give and take the 10/15 pips for stops.It just kept going this time, suggesting more medium/long term books are at work. I’ll go with the wait for a bounce and sell USD again if CPI’s don’t overshoot to much.
Been jobbing it around from the short side as per previous, still a tad short USDJPY , my stop will be placed through 111.80 on that one. I was long EURUSD and let it go on that barrier, it seems to have been to early. I will either wait for a 1.2060/70 dip on better CPI or a break through 1.2150 to re-instate for 1.23/24
It’s still a bit early to call all this a definitive move to a new plain but you’re right in that these moves look “backed up” rather than just short-term pump and dumps.