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Market Brief
Australian inflation data came in above expectations, though the rate of inflation around the developed countries is accelerating higher, so maybe it isn’t that surprising. The Consumer Price Index (CPI) rose 1.3% this quarter. Over the twelve months to the December 2021 quarter, the CPI rose 3.5%. The most significant price rises were for new dwelling purchases by owner-occupiers (+4.2%) and Automotive fuel (+6.6%). These increases will continue whilst there are COVID-19 related supply chain disruptions and strong demand.
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The AUDUSD continues to trade below the previous rising channel but did catch a bid late in yesterday’s US session as risk assets were bought up from the lows. The market structure break of significant swing lows is indicating a continuation lower is to be expected but as we are now all waiting for the FOMC tomorrow, today could be a sideways day.
The forex heatmap at the start of the London session is mixed with the Swiss franc and New Zealand dollar weakening against their peers. The yen and dollar are currently competing for dominance along with the Chinese yuan.
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The EURUSD is now finding solid resistance from the 1.13400 level and is trading lower lows and lower highs daily. The momentum and price action are hinting towards more downside pressure, but the ActivTrader sentiment indicator is showing that the bulls and bears are evenly matched.
The GBPUSD sentiment as seen by the ActivTrader sentiment indicator is also largely even with a slight bias favouring the bulls.
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The GBPUSD has now retraced from the swing high since the December Bank of England rate hike. The fall has found the 50% level and the 50-period EMA on the daily time frame.
Today’s news from the UK will include CBI Industrial Order Expectations and Public Sector Net Borrowing. In the US session, the Richmond Manufacturing Index and CB Consumer Confidence are the data points that may lead to headline traders taking a position, though the consensus is that the regular trading hours are likely to be slower until the FOMC tomorrow.
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The US equity bounce last night came in fast and with volume. The Dow Jones Industrial Average had dropped over 1000 points before recovering and ending the day green.
