The United States will release data on the consumer price index today, which is expected to show a decline in the annualized rate from 3.7% to 3.6%.
➡️ Markets await today's release of US inflation (CPI) data, which is expected to show a decline in the annualized rate from 3.7% to 3.6% and a decline in the monthly increase from 0.6% to 0.3%. The US dollar has been weak, even after yesterday's FOMC meeting minutes suggesting the Fed will hike further in 2023, so an even lower reading could send the dollar tumbling. Conversely, a shock increase could bring the dollar back.
➡️ The war in the Middle East remains essentially contained between Gaza and Israel, although there have been minor clashes between Israel and Hezbollah on the Lebanese border. Crude oil has given up all the gains it made earlier this week, and with the dollar falling, markets appear to expect things to remain subdued. Yesterday the United States offered another aircraft carrier to discourage Iran or Hezbollah from going to war.
➡️ Precious metals continue to strengthen, with They rising particularly sharply, although it technically remains within a long-term downtrend.
➡️ In the Forex market, the US dollar index has now fallen below the key support level at 105.36, which is technically indicative of a further decline. However, Trend traders in the Forex market will be more interested in having a long position on the USD/JPY , which continues to strengthen. Since Tokyo opened last night, the New Zealand dollar has been the weakest major currency, while the Swiss franc has been the strongest.
➡️ FOMC meeting minutes were released yesterday suggesting the Fed will make a further 25 basis point rate hike during the remainder of 2023. This did not have the effect of strengthening the dollar.
➡️ Better-than-expected PPI data was released in the United States yesterday, suggesting that inflation may not fall today as expected.
➡️ Bank of Japan board member Noguchi, speaking a few hours ago, said the increase in the YCC allowance earlier this year was not intended as a tightening of monetary policy. This could help the yen weaken further, although the prospect of Bank of Japan intervention remains, especially if the USD/JPY currency pair reaches the big round figure of ¥150.
Credit by DailyForex.com