US CPI Data Keenly Expected; Precious Metals Reach New Highs; USD/JPY Trades Near 34-Year High at ¥152; RBNZ Leaves Rates Unchanged at 5.50%.
- Markets will be watching today’s release of US CPI data very closely, with inflation expected to show a slight decline on its previous month-on-month increase, from 0.4% to 0.3%. This would result in an increased annualized rate of 3.4%. If inflation is higher than expected, that will likely boost the US Dollar and knock stock markets and commodities. If lower than expected, the reverse will probably happen.
- Yesterday, spot Gold again rallied to a new all-time high above $2,365. Gold tends to be positively correlated with risky assets, some of which have been enjoying rallies to new highs in recent days. Trend traders will want to be long here. Other precious metals have also been seeing gains, with Silver again reaching a new 2.5-year high price. Some non-precious metals such as Copper are also breaking to new long-term highs.
- In its policy release a few hours ago, the Reserve Bank of New Zealand kept its Official Cash Rate at 5.50%, as was expected. The language in the statement was confidently restrictive and the New Zealand Dollar has increased a bit in value following the release.
- In the Forex market, professional market bets against the Japanese Yen have reached a 17-year high, suggesting that the Yen’s historic lows will soon be retested despite a clear risk of intervention at that area by the Bank of Japan. Governor Ueda has stated that FX moves will not lead to a change in monetary policy, which will remain accommodative for the time being. The USD/JPY currency pair is close to its 34-year low price just below ¥152, and trend traders will become excited if we see a sustained bullish breakout above ¥152 later. Since today’s Tokyo open, the strongest major currency has been the New Zealand Dollar, and the weakest major currency has been the Japanese Yen.
- Crude Oil is making a bearish retracement after WTI and Brent both hit new 5-month high prices on Friday. Traders will get a series of data releases concerning supply and demand throughout this week.
- The minor commodity Cocoa continues to look bullish after closing at a new daily high price earlier this week. The commodity superfood has almost tripled in value over the last year alone, with many analysts suggesting supply side shortages are at least partly to blame for the meteoric rise. There is more and more demand for Cocoa every year as it is coveted as a key ingredient for chocolate but also as a superfood in its own right. Trend traders will be interested here on the long side. As well as Cocoa futures, there are Cocoa ETNs available which may be more suitable for retail traders and investors.
- The Bank of Canada will be holding a policy meeting later today, at which it is expected to leave rates unchanged at 5.00%. There is a small chance of a cut, and markets will be closely examining the Bank’s language for clues as to future rate hikes.
- The Federal Reserve will release the minutes of its most recent FOMC meeting later today.
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