USD/JPY Ended The Week Below 128, GBP/USD Managed To End The Week Above 1.22
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The data from the US revealed that the Consumer Price Index declined by 0.1% on a monthly basis in December. The Core CPI, which strips volatile energy and food prices, was up 0.3% in the same period. Finally, annual Core CPI arrived at 5.7%, down from 6% in November, as expected. Although the US Dollar struggled to find direction with the initial reaction to the US inflation report, dovish comments from Fed officials triggered a sharp decline in the US T-bond yields and weighed heavily on the currency.
Atlanta Federal Reserve Bank President Raphael Bostic said that he was comfortable with a 25 basis points (bps) increase at the next meeting. On the same note, Philadelphia Fed President Patrick Harker noted that it was time for future Fed rate hikes to shift to 25 bps increments.
Dovish comments from Fed officials, however, made sure that investors continued to move away from the US Dollar.
The latest Michigan Consumer Sentiment report showed consumer sentiment remaining low. Year-ahead inflation expectations fell to 4% from 4.4% while the five-year reading nudged a touch higher to 3% from 2.9% in December.
USD/JPY
USD/JPY started the week trading at 130.8020. Over the next days, trading was in the range of 131.50-132.50. The USD/JPY pair reached its highest level on Wednesday, a record high was set at 132.8370. After that, the pair began to fall below 130. The pair recorded a low just before the end of the trading week at 127.53, and ended the week just above the weekly low of 127.8340.
The Japanese Yen ended last week on the front foot from both USD weakness driven by softening inflation in the U.S. as well as market hopefulness around a more aggressive Bank of Japan (BoJ). A change from the current ultra-loose monetary policy due to elevated inflationary pressures could be something that can take place next week. The Bank of Japan meets on January 18.
EUR/USD
For the EUR/USD pair, this week was in an uptrend. The pair started the week at 1.0669. And around 1.0660 it recorded its lowest weekly level. In the following days it was growing, exceeding the level of 1.07. On Thursday, the EUR/USD pair crossed the threshold of 1.08 and above this level reached the weekly maximum - 1.0870. The trade for the pair ended above 1.08 at 1.0828.
European Central Bank (ECB) policymaker Martins Kazaks said there was no reason for markets to be betting on an interest rate cut. While the Fed is now widely expected to ease further policy tightening, ECB policymakers are scrambling to ensure markets understand their commitment to the hawkish outlook.
GBP/USD
The cable pair started the week at 1.2114 and finished much higher at 1.2234. GBP/USD traded the low for the week at 1.2097. The record high level in the week was reached by the pair at the level of 1.2242.
GBP/USD has benefited from the broad-based selling pressure surrounding the US Dollar and reached its highest level since December 15 at 1.2250. The pair's near-term technical outlook suggests that the bullish stays intact.
Gross Domestic Product Growth was 0.1% when the markets had been looking for a 0.2% contraction. However, as manufacturing and industrial production missed expectations.
Interest rate support for sterling is likely to remain fitful as the economic numbers trickle out. Continued poor labor relations and the prospect of recession, possibly accompanied by a degree of ‘stagflation’ will keep the Pound a nervous bullish bet.
AUD/USD
The Australian pair started the week at 0.6901. In the following days, trading was in the range of 0.6865-0.6950. The lower border of the range was also the weekly low of the AUD/USD pair. The Aussie Pair's weekly peak traded close to the 0.70-0.6984 level. The pair finished trading near 0.70 at 0.6980
Source: finance.yahoo.com, investing.com
