CPI May Cause the Dollar to Open a New Round of Declines

Summary:

Yellen's speech and the New York Fed's inflation expectations survey both indicate that the CPI is likely to slow this time, which also means that the Fed is about to enter the second phase of tightening.

SELL USDX

EXP

EXPIRED

105.400

Entry Price

103.000

106.800

103.063 -0.189 -0.18%

Pips

EXPIRED

103.000

104.356

Exit Price

105.400

Entry Price

106.800

Fundamentals

Market trends were flat on Monday, with the overall market in a wait-and-see mode before the U.S. CPI release. The dollar had a choppy performance, edging up 0.06%. The market is now widely expected to see a slowdown in CPI, which is the most important data before the Fed's December interest rate resolution and the last inflation report in 2022. This data will directly affect the market's expectations for the Fed's December meeting. From the market expectation, the Fed will announce a 50 basis point rate hike this week after 75 basis points of consecutive rate hikes. At the same time, the market is also very concerned about whether the terminal interest rate forecast of the Fed exceeds 5%. The current federal fund's futures market forecasts that rates will peak at 4.984% in May, the level at which the Fed will stop raising interest rates.

In addition, U.S. Treasury Secretary Yellen said in an interview with CBS on Sunday (EST) that she expects inflation to fall sharply by the end of next year, barring an unexpected shock. Positive signs are seen, and many underlying causes are slowly being addressed. Transportation costs have come down, delivery lags have shortened, and petrol prices have fallen sharply. The U.S. is at or above full employment, so there is no need for the economy to grow as fast as it did in the post-pandemic recovery to bring people back into the labor market.

Meanwhile, the New York Fed also released its November Survey of Consumer Expectations (SCE), with inflation expectations falling across the board:

The median inflation expectation for the next year is 5.2% (previously 5.9%), the median inflation expectation for the next three years is 3.0% (previously 3.1%), and the median inflation expectation for the next five years is 2.3% (previously 2.4%).

This may mean that there is a higher probability of a slowdown in the CPI data and that the Fed is about to enter the second phase of tightening.

Technical Analysis

In the 4-hour chart, the dollar has been in an overall oscillation since last week, but the upcoming CPI release will help the dollar break out of this situation. In the short term, the dollar will only have room for further gains if it breaks 106.038, a line at the bottom of the 106.038-107.211 oscillation range, while the 100 SMA in the 4-hour chart and the 200 SMA in the daily chart are also near this line. Its strong support is 104.016 in the short term, and it may go straight to 103 below the line. As for indicators, Stoch has a death cross; DMI shows that the dollar has the possibility of upside in the short term; in the Ichimoku cloud, although the price has fallen below the benchmark line and the turning line, you still need to further observe the movement, and the current trend has shown that upward momentum is accumulating. Overall, the dollar is likely to rise slightly after the decline. USDX: CPI May Cause the Dollar to Open a New Round of Declines_1

USDX: CPI May Cause the Dollar to Open a New Round of Declines_1

Trading Recommendations

Trading direction: Short

Entry price: 105.40

Target price: 103.00

Stop loss: 106.8

Supports: 104.495, 104.016, 103.519, 103.00

Resistances: 104.952, 105.40, 106.038, 106.825

Risk Warnings and Investment Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

Higher Downside Risk in Medium to Long Term, Continue Shorting after Rally

Winkelmann

Forex

Summary:

The USDJPY has fallen back significantly from its highs and still faces further downside risk in the medium to long term. Shorting is still an option after the rally.

SELL USDJPY

EXP

EXPIRED

138.400

Entry Price

132.500

141.000

148.365 -0.265 -0.17%

Pips

EXPIRED

132.500

133.135

Exit Price

138.400

Entry Price

141.000

Fundamentals

As the Bank of Japan (BOJ) has maintained an ultra-loose monetary policy, the movement of the USDJPY is almost always dependent on the dollar and is highly correlated with the Fed's monetary policy. Since November, the market has lowered expectations for further aggressive interest rate hikes by the Fed, especially after last week's release of US PPI growth in November which continued to cool. This week's November inflation is also expected to slow further, and the market is already betting and digesting expectations that the Fed will slow down its rate hike to 50 basis points in December. The yen has clearly benefited from the continued weakness in US US treasury yields and the US dollar index.

However, the US job market and service sector activity remain strong, adding to the difficulty of the Fed's fight against inflation. The market is starting to focus on how high the Fed's latest dot plot gives the forecast for the terminal rate and whether it will exceed 5%. As the Fed Rate Decision approaches, the market is cautious and there is a recurring "tug-of-war". The dollar has the potential to rebound in the short term but is still at risk of further downside in the medium to long term.

As for Japan, data showed that core consumer prices in Tokyo rose to a 40-year high year-on-year in November and were above the central bank's 2% target for the sixth consecutive month, indicating signs of widening inflationary pressures. Deflation in Japan's economy, which has lasted for decades, is entering its endgame. And Bank of Japan Governor Haruhiko Kuroda said in his latest speech that the BOJ will engage in communication to withdraw from easing policy when prices are close to the target level. This has sparked market speculation of a policy adjustment by the BOJ, possibly even an end to the YCC policy, and is expected to be a new driver of the yen's appreciation.

For now, the dollar may have topped out and the probability is that its trend will remain oscillating and weakening. But with the Fed's hawkish stance unchanged, more data is needed to prove that inflation and employment are slowing. The dollar is likely to consolidate ahead of the December Fed meeting and the November US CPI. Even if the USDJPY has passed its big top, this does not mean that it will fall straight down from its current level; it may remain high in the short term, but it will hardly approach its previous highs again.

Technical Analysis

USDJPY: Higher Downside Risk in Medium to Long Term, Continue Shorting after Rally_1

In the weekly chart, the USDJPY has fallen back significantly from its highs and the sign of a top is clear; the medium to long-term trend may have reversed. The currency pair has rallied in the short term, but none of it is strong and there is a potential for the formation of a "head and shoulders top". Therefore, going short at highs is still the best option for now.

USDJPY: Higher Downside Risk in Medium to Long Term, Continue Shorting after Rally_2

From the daily chart, the USDJPY continues to oscillate down and is rebounding after falling sharply in the short term. Keep an eye on the pressure near 138.4 above and continue shorting if the rebound is not broken.

It is recommended to go short. Shorting can be attempted after the price rallies to around 138.4, with the initial target set below support around 134.0, the second target set near 132.0, and the stop loss set above 140.0.

Trading Recommendations

Trading direction: Short

Entry price: 138.4

Target price: 132.5

Stop loss: 141.0

Support: 132.0/134.0

Resistance: 145.0/140.0

Risk Warnings and Investment Disclaimers

Supply Turmoil, Oil Prices Stabilize in Short Term

King Ten

Commodity

Summary:

TC Energy's Canada-U.S. crude oil pipeline may be shut down for an extended period of time, and supply turmoil may boost oil prices in the short term.

BUY WTI

Close Time

CLOSED

73.500

Entry Price

78.500

68.500

75.304 +0.208 +0.27%

133.2

Pips

Profit

68.500

74.832

Exit Price

73.500

Entry Price

78.500

Fundamentals

A Platts survey released by S&P Global Commodity Watch showed that OPEC+ oil production fell by 700,000 BPD in November, the largest monthly decline since April when Russian output plunged due to sanctions.

International crude oil futures prices rose on Dec. 12, mainly on supply concerns sparked by an unclear timetable for the resumption of the Keystone pipeline in the U.S. The possible prolonged shutdown of TC Energy's Canada-U.S. Keystone crude oil pipeline boosted oil prices.

Jim Ritterbusch of Ritterbusch and Associates said, "The Keystone pipeline repairs appear to be taking longer than expected, increasing the likelihood of further reductions in Cushing inventories." Traders are concerned about how long it will take to clean up and restart the Keystone oil pipeline. More than 14,000 barrels of oil leaked from the pipeline last week, the largest U.S. crude spill in nearly a decade. The pipeline shutdown is expected to reduce supplies from Oklahoma's Cushing storage hub, where U.S. index crude futures are delivered.

A preliminary Reuters survey showed that the average of seven analysts interviewed estimated that overall crude inventories are expected to fall by about 3.9 million barrels in the week ending Dec. 9. In addition, Bank of America Global Research said that the global indicator Brent crude oil could rally and quickly rise through $90 per barrel against the backdrop of a dovish monetary policy of the U.S. Federal Reserve and a "successful" restart of the Chinese economy.

Technical Analysis

From the 1-hour graph, oil price short-term rebound up to 5, 10, and 20-day SMAs, and the recent rally trend is relatively intact, with short-term resistance at 74, 78, and 82 nearby, respectively. The opening of the MACD golden fork is gradually diverging, and short-term upside action is still strengthening. WTI: Supply Turmoil, Oil Prices Stabilize in Short Term_1

WTI: Supply Turmoil, Oil Prices Stabilize in Short Term_1

Trading Recommendations

Trading direction: long

Entry point: 73.500

Target: 78.500

Stop loss: 68.500

Risk Warnings and Investment Disclaimers

Gold Prices May Benefit from the Year-End Demand Boost and Extend Upside

Eva Chen

Commodity

Summary:

We expect this week's inflation report and Fed meeting to be bad for gold prices, but that is not the same as saying gold prices will see another crash. Since gold prices will have enough (pending orders) buying on any short-term downside, the more down space the stronger the buying; especially before the bulls do not fully test the middle of the range ($2070-1614), the bulls may seek more low buying to defend their medium-term upward momentum.

BUY XAUUSD

EXP

EXPIRED

1762.00

Entry Price

1840.00

1738.00

2021.04 +7.01 +0.34%

Pips

EXPIRED

1738.00

1798.27

Exit Price

1762.00

Entry Price

1840.00

Fundamentals

After the U.S. PPI, namely the Producer Price Index, rose more than expected in November, the U.S. CPI data for November, due out this week, is expected to move in the right direction, but not as quickly as many expect. Nonetheless, gold prices are likely to be shaky, and eventually move higher.

The logic is that despite market expectations of a shift to a more hawkish outlook for this week's FOMC meeting, the U.S. dollar index and U.S. bond yields have not been buoyed by such expectations so far, mainly because the institutional liquidation of the USD is still underway.

At the same time, the proportion of institutions increasing their allocations to gold is steadily increasing against a backdrop of increasing recession risk and the persistence and potential escalation of geopolitical risk. For example, in just 3 months, the 10-year U.S. bond yield triggered an -80 basis point spread, driving some institutions to buy gold.

In addition, the sudden and early COVID-19 policy easing in China and Hong Kong and the increase in demand at the end of the year mean that physical demand will also improve.

On the other hand, the new Fed dot plot and the new economic forecast are risk factors for gold. What is known so far from officials is that the pace of rate hikes may slow, but we could still see a higher terminal rate. Tuesday's release of inflation data could be more modest than the market expects, and while this may not have any impact on the Fed's December rate decision, it could influence the tone of the press conference. If the market lowers expectations for a rate hike cycle, it could give gold a boost.

XAUUSD: Gold Prices May Benefit from the Year-End Demand Boost and Extend Upside_1

Technical Analysis

On Monday, gold prices fell for the first time in five trading days. Currently, it is below its 200-day SMA of $1791, and the bears are interested in seeing Thursday's low of $1780 as the next downside target.

The momentum indicators suggest that there may be some downside in the near future. The MACD fell below its 0-axis, while the RSI sloped downward above the neutral 50. A death cross is formed downward in the 4-hour chart.

If the short momentum accelerates, the next support level at $1776 will be easily tested, but more downside will stop at the $1760 level. From here, the bulls will defend their medium-term upside action. In the medium term, if prices break above the 200-day SMA and the $1,810 level, market sentiment will turn bullish. And any further gains will stop at the $1840 range. It is recommended to buy the dips.

Trading Recommendations

Trading Direction: Long

Entry Price: 1762

Target Price: 1840

Stop Loss: 1738

Valid Until: 2022-12-26 23:55:00

Support: 1776, 1758, 1750

Resistance: 1793, 1803, 1810

Risk Warnings and Investment Disclaimers

Market Focuses on Big Data, Gold Price Volatility May Increase

King Ten

Commodity

Summary:

The dollar's rally weighed on the gold price. The market focuses on U.S. inflation data and the Fed Interest Rate Decision. And the gold price's volatility may increase which will test the support or pressure position.

SELL XAUUSD

Close Time

CLOSED

1800.00

Entry Price

1768.00

1830.00

2021.04 +7.01 +0.34%

42.6

Pips

Profit

1768.00

1795.74

Exit Price

1800.00

Entry Price

1830.00

Fundamentals

During the Asian session on Monday (Dec. 12), spot gold oscillated lower and is currently trading near $1789.50/oz, pressured by the rebound in the dollar. The market is generally focused on the U.S. CPI data for November and the Fed Interest Rate Decision this week. The US PPI data was stronger than expected on Friday and market concerns about U.S. inflation have picked up, giving support to the dollar.

U.S. CPI data for November will be released on Tuesday, and the Fed Interest Rate Decision will be announced in the early hours of Thursday morning Beijing time. Market eyes are focused on them.

Technical Analysis

In the daily chart, although the gold price is oscillating upward, it is again suppressed by resistance near the August high of 1807.72 and is now back down below the 200-day SMA. The bearish divergence signal of the MACD continues, and one should beware of the possibility of a partial "M" top. Initial support is near the 5-day SMA at 1786.51; the 10-day SMA is slightly above the 1780 mark; focusing on support near the 20-day SMA at 1768.02; the near-week low support is also near this position, and if the support is broken, the bearish signal will be increased in the future.

The above initial resistance lies at the 1800 integer mark. And if the gold price strongly recovers the position, the bearish signal will be weakened in the short term. XAUUSD: Market Focuses on Big Data, Gold Price Volatility May Increase_1

XAUUSD: Market Focuses on Big Data, Gold Price Volatility May Increase_1

Trading Recommendations

Trading direction: Short

Entry price: 1800.00

Target price: 1768.00

Stop loss: 1830.00

Support: 1768.02/1735.02

Resistance: 1807.72/1814.36

Risk Warnings and Investment Disclaimers

The Contradiction Between Supply and Demand Is Balanced, and the High Oscillation Will Be Extended In the Short Term

King Ten

Summary:

The retreat of the US dollar index coupled with the improvement of expected sentiment, Copper prices fluctuated at a high level. It is still suitable for buying low and selling high in the short term.

SELL COPPER

Close Time

CLOSED

8530.000

Entry Price

8114.000

8800.000

8446.445 +65.950 +0.78%

2394.5

Pips

Profit

8114.000

8506.055

Exit Price

8530.000

Entry Price

8800.000

Fundamentals

LME Copper stocks decreased by 2,000 tonnes to 85,400 tonnes. And the total inventory of the Shanghai Free Trade Zone and Shanghai Futures Exchange(SHFE) is 94,000 tonnes (previous value 80,200 tons), of which the SHFE increased by 13,320 tons and the Free Trade Zone inventory increased by 500 tons.

The Fed raised interest rates by another 75bps at its November meeting.

While overseas, the U.S. economy is expected to have a recession as its GDP in the first and second quarters was negative month-on-month. In addition, inflationary pressures have triggered the United States to adopt a monetary tightening policy that was beyond expectation. As the Fed officially began to shrink its balance sheet in June, with a monthly reduction of $47.5 billion/month, which increased to $95 billion/month in September. Therefore, the tightening monetary policy and recessionary pressures have weighed much on Copper prices.

Monetary policy tightening and economic recession pressure apply stress to copper prices, with Powell again proposing to spare no effort to control inflation at the Jackson Hole meeting and to raise interest rates by 75bp again at the November rate meeting, with continued pressure from the overseas macro market.

However, the October U.S. inflation data fell back, perhaps making the pace of interest rate hikes at the December Fed meeting slow. From the perspective of industry fundamentals, the supply of Copper Mines will tend to be loose. As Smelters are still profitable at present, so the willingness to schedule production remains positive, and the supply of refined Copper is expected to recover. On the demand side, driven by power investment, Copper demand has remained resilient this year. Besides, Copper inventories have fallen rapidly recently, which is mainly because of the strong resilience of downstream demand. Against the backdrop of low inventories, Copper prices are supposed to remain fluctuating in the short term.

Technical Analysis

Trading at the daily chart, The prototype of the double tops has appeared, and the final stroke is now being outlined. The resistance at the top is around 8588, while the first support at the bottom is around 8114. At present, MACD is in the overbought area of high levels and has a tendency to get out of the dead cross. To a certain extent, the bearish signal has been gradually strengthened. Therefore, aggressive traders can prepare to stop loss and try to go short at highs. COPPER: The Contradiction Between Supply and Demand Is Balanced, and the High Oscillation Will Be Extended In the Short Term_1

COPPER: The Contradiction Between Supply and Demand Is Balanced, and the High Oscillation Will Be Extended In the Short Term_1

Trading Recommendations

Trading Direction: Short

Entry Price: 8530

Target Price: 8114

Stop Loss: 8800

Support: 8114/7876

Resistance: 8588/8768

Risk Warnings and Investment Disclaimers

Jason

Analyst

I have an in-depth study of fundamentals, especiaslly for the US dollar market. I'm good at short and medium term trading by virtue of my profound financial theoretical knowledge and extensive practical experience.

Ranking

Articles

332

Win Rate

0.00%

P/L Ratio

1.23

Focus on

USDX, EURUSD, GBPUSD

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CPI May Cause the Dollar to Open a New Round of Declines

Fundamentals

Technical Analysis

Trading Recommendations

Higher Downside Risk in Medium to Long Term, Continue Shorting after Rally

Fundamentals

Technical Analysis

Trading Recommendations

Supply Turmoil, Oil Prices Stabilize in Short Term

Fundamentals

Technical Analysis

Trading Recommendations

Gold Prices May Benefit from the Year-End Demand Boost and Extend Upside

Fundamentals

Technical Analysis

Trading Recommendations

Market Focuses on Big Data, Gold Price Volatility May Increase

Fundamentals

Technical Analysis

Trading Recommendations

The Contradiction Between Supply and Demand Is Balanced, and the High Oscillation Will Be Extended In the Short Term

Fundamentals

Technical Analysis

Short Opportunity

TRADE RECOMMENDATION

Risk Disclosure