USD Strengthens on Hot US CPI Data, EURUSD Trends, and USDJPY Climbs Amidst Economic Indicators

Last night (Australian time) at 10:30 pm, a highly anticipated economic indicator was released from the United States: Retail Sales and Core Retail Sales MoM.

usd-selling-subsides-after-largest-drop-in-a-year-20231204-900x500 (1)

Market expectations hovered around 0.3%, following the previous month’s 0.9% reading. However, the actual figures diverged significantly from forecasts, with a robust 0.7% increase. This unexpected outcome further bolstered the USD, propelling it from 105.900 to its current position at 106.297. It underscores the enduring strength of the American economy, despite other critical data pointing to elevated and seemingly uncontrollable inflation.

In reaction to this news, the EURUSD experienced a slight fluctuation, but as the Asian session unfolds, we witness heightened volatility in the currency pair, as anticipated. As mentioned in my analysis yesterday, we can expect the EURUSD to approach levels around 1.05 in the coming weeks or months, contingent upon market volatility.

EURUSD Daily Chart

EURUSD Daily Chart
Source: Finlogix Charts

 

Looking ahead to tomorrow (Wednesday, April 17, 2024), we anticipate market data from the European region concerning the country’s inflation over a specified period. This data, encompassing YoY and MoM metrics, holds significance for the EUR’s strength. A rise in inflation would likely bolster the EUR and potentially trigger a retracement in price. Conversely, market participants anticipate a slight dip in inflation. Personally, I lean towards a downward bias in the risk assessment.

US Retail Sales

US Retail Sales Rating
Source: Finlogix Economic Calander 

 

March’s hot US CPI print has led to Fed rate cut expectations being dialled back considerably in anticipation that strong US economic performance will now keep inflation higher for longer. The net upshot of this has been a further weakening of the yen against the greenback, with USD/JPY climbing beyond its recent peak to around 153. The Ministry of Finance (MoF) has been quick to voice its concern, with Vice Finance Minister for International Affairs Masato Kanda yesterday characterizing recent exchange rate movements as “rapid” and declaring that “We’d like to respond appropriately to excessive moves, without ruling out any options” (Reuters).

A July hike is possible should inflation data surprise. That said, with Japan’s economy already running at full employment, increases in aggregate demand and/or yen depreciation now have obvious potential to generate additional upward pressure on prices. Persistent US inflation has owed much to the strength of US aggregate demand, which, clearly, is also relevant to the outlook for the Japanese economy. Moreover, the BoJ’s views on domestic inflation should be affected if the prospect of Fed rate cuts continues to recede and the yen is expected to remain weak as a result. We thus see potential for the next rate hike to be brought forward if such inflationary changes in external conditions are accompanied by strong domestic CPI data in the next few months. In particular, the BoJ will be looking for evidence that this spring’s sizable wage hikes are pushing up services prices. A July rate hike might start to look more likely if the Tokyo CPI print for April (due on the second day of the BoJ’s meeting on 25-26 April) comes in higher than +0.2% m/m.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

Read this next

blockdag

Top Bullish Crypto: Fetch.ai & Pepe Coin Price Surge, But BlockDAG Sees Investor Rush as X Series Miners Stand Out

Compare Fetch.ai (FET) Bull Run, Pepe Coin price, and top bullish crypto BlockDAG. Discover why BlockDAG’s innovation and growth potential make it the best choice.

Digital Assets

Coinbase resumes XRP trading in New York after nine-month hiatus

Coinbase has resumed trading for XRP in New York, the company’s chief legal officer, Paul Grewal, announced on Thursday. This comes after a nine-month suspension of the cryptocurrency on the exchange due to regulatory scrutiny.

Institutional FX

Swissquote joins Fortex Hub to expand liquidity distribution

ECN trading platform and technology provider, Fortex Inc. has announced a new integration with Swissquote Group, Switzerland’s provider of online trading services.

Chainwire

Multipool Enters Partnership with Mobilum Offering Users Fiat to DeFi On/Off Ramp

Multipool, a leading innovator in the blockchain and cryptocurrency industry announces a corporate partnership with Mobilum.

Retail FX

IC Markets taps TipRanks’ trading research tools

Sydney-based IC Markets has completed integration of TipRanks’s rating tools, which ranks analysts and financial bloggers based on their picks’ performance analysis, in a bid to provide its clients with new research capabilities.

Digital Assets

Gate.io shelves plan to operate in Hong Kong

Gate Digital Ltd (Gate HK) announced it is winding down operations and has withdrawn its application for a crypto trading platform license in Hong Kong.

Chainwire

Sui and Mesh Combine Forces to Bring Simplified Transactions Across the Sui Ecosystem

With the addition of the Mesh platform, Sui Wallet will achieve product parity with the world’s largest self-custody wallets, while Mesh now natively supports the SUI token

Market News, Tech and Fundamental, Technical Analysis

EURGBP Technical Analysis Report 23 May, 2024

EURGBP currency pair can be expected to rise further toward the next resistance level 0.8560.

Digital Assets

Bybit denies financial woes and hacking rumors

Ben Zhou, CEO of Dubai-based cryptocurrency exchange Bybit, has refuted circulating rumors that the platform has been hacked or is insolvent. Zhou addressed the speculations in a post on the social media platform X.

<