The US Dollar Index is testing the top of the short-term range ahead of the US CPI release!
Will the dollar stay in its range? Or will we see a breakthrough today?
Before we go any further, ICYMI, Yesterday’s Watchlist checked short-term resistance levels in the AUD/JPY after a risky easy trading day. Be sure to check if it’s still a good game!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
Federal Reserve Quarterly First loan officer opinion The survey indicated respondents’ expectations of tighter credit terms, lower customer demand, and tighter credit terms likely to increase over the course of the year.
BRC: UK retail turnout It rose 5.3% year-on-year in April, below the 3-month average of 7.0%.
Bank of Japan Ueda:”We would like to end yield curve control and then proceed to shrink the balance sheet as soon as we have inflation expectations that a sustainable and stable inflation of 2% will be achieved.“
Retail sales in Australia A 0.4% m/m improvement in March, up 5.4% from March 2022. Retail volumes fell 0.6% qoq in the first quarter after declining 0.3% in the fourth quarter and confirming a “consumer recession”.
Consumer spending in Japan It fell unexpectedly, down 1.9% year-on-year in March versus 0.4% expected and 1.6% in February.
Real wages in Japan Decreased 2.9% year-on-year in March, saw a full year of declines starting in April 2022
China imports It contracted 7.9% y/y in April (vs. -0.2% expected and -1.4% in March) while exports slowed from 14.8% to 8.5%, casting doubt on the recovery path in China.
Halifax: UK house prices It fell 0.3% month over month in March, the first decline this year. It only grew by 0.1% annually, the smallest increase since December 2012
Price action news
15-Minute Japanese Yen Overlay Graphics by TV
The biggest stories during the Asian session were disappointing trade numbers in China and Bank of Japan (BOJ) Governor Ueda confirmed that they will scrap the accommodative yield curve control (YCC) program once they are satisfied with the inflation path.
Global growth concerns (from China data), concerns about the US debt ceiling, and a surprisingly upbeat Bank of Japan statement lifted the Japanese yen against its major peers.
The Japanese yen fell below its lows in the US session before rising to its highs in the US session in early European trading.
Possible catalysts coming in the economic calendar:
US NFIB Small Business Index at 10:00 AM GMT
FOMC member Jefferson is scheduled to deliver a speech at 12:30 PM GMT
Leading Japanese indices at 5:00 AM GMT
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US Dollar Index (DXY) 15-Minute Forex Planned by TV
Discuss the debt ceiling of?
The US dollar is having a good week so far, recovering from yesterday’s lows as traders focus more on the downside US Consumer Price Index release rather than the drama of the US debt ceiling.
The US Dollar Index (DXY) has now rebounded from as low as 101.00 and is trading near the 101.60 resistance range that held last week.
As you can see, 101.60 is also conveniently close to R1 (101.52) for today’s standard pivot points.
Will range resistance hold for another day today?
Traders see further increases in the official US CPI, which could support a longer period of higher interest rates from the Fed.
The hawkish outlook could break the DXY out of its range and push it to Friday’s highs of 101.70.
But if traders focus on debt ceiling headlines, the dollar could lose points against other currencies.
DXY will rebound from R1 or range resistance 101.60 and drop to intraday lows of 101.40.