The U.S. dollar index is testing the top of a short-term range ahead of the U.S. CPI release!
Will the Greenback stick to its range? Or will we see a breakout today?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/JPY’s short-term resistance levels after a risk-friendly trading day. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Fed’s quarterly Senior Loan Officer Opinion survey noted the respondents’ expectations of tighter credit conditions, lower customer demand, and a further tightening of credit conditions likely throughout the year.
BRC: U.K. retail footfall rose by 5.3% y/y in April, lower than the 3-month average of 7.0%
BOJ Gov. Ueda: “We would like to end yield curve control and then proceed to shrinking a balance sheet once we have an inflation outlook indicating that sustainable and stable 2% inflation will be achieved.”
Australia’s retail sales improved by 0.4% m/m in March, up by 5.4% against March 2022. Retail volumes were down by 0.6% q/q in Q1 after Q4’s 0.3% decline and confirmed a “consumer recession.”
Japan’s consumer spending unexpectedly fell, down 1.9% y/y in March vs. 0.4% expected and 1.6% in February
Japan’s real wages were down by 2.9% y/y in March and marked a full year of declines that started in April 2022
China’s imports shrank by 7.9% y/y in April (vs. 0.2% expected and -1.4% in March) while exports slowed down from 14.8% to 8.5%, casting doubts on China’s recovery trajectory
Halifax: U.K.’s house prices fell by 0.3% m/m in March, the first drop this year. They only grew by an annualized 0.1%, the smallest increase since December 2012
Price Action News
Overlay of JPY Pairs 15-min Charts by TV
The biggest stories during the Asian session were China’s disappointing trade numbers and Bank of Japan (BOJ) Governor Ueda confirming that they’ll scrap the accommodative Yield Curve Control (YCC) program as soon as they’re satisfied with the inflation trajectory.
Global growth concerns (from China’s data), U.S. debt ceiling worries, and a surprisingly hawkish BOJ statement lifted the Japanese yen against its major counterparts.
JPY dipped below its U.S. session lows before rising back up to its U.S. session highs at the start of European trading.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. NFIB small business index at 10:00 am GMT
FOMC member Jefferson is to give a speech at 12:30 pm GMT
Japan’s leading indicators at 5:00 am GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
U.S. Dollar Index (DXY): 15-min
U.S. Dollar Index (DXY) 15-min Forex Chart by TV
Debt ceiling debate who?
The U.S. dollar has been having a good week so far, recovering from yesterday’s lows as traders focus more on the U.S. CPI release rather than the U.S. debt ceiling drama.
The U.S. dollar index (DXY) is now way up from its 101.00 low and is trading near the 101.60 range resistance that held last week.As you can see, 101.60 is also conveniently close to the R1 (101.52) of today’s Standard Pivot Points.
Will the range resistance hold for another day today?
Traders see further increases for the official U.S. CPI, which would support a longer period of high-interest rates from the Fed.
Hawkish expectations could bust DXY from its range and push it back to Friday’s 101.70 highs.
But if traders focus on debt ceiling headlines, then the dollar could lose pips against its counterparts.
DXY would bounce from R1 or the 101.60 range resistance and dip back to its 101.40 intraday lows.