Market Headlines
The greenback plummeted following the release of US inflation figures. The December Consumer Price Index was confirmed at 7% YoY, as expected, while the core reading beat expectations, up to 5.5%. The news, which usually spurs risk aversion, had the opposite effect this time. In the main event, US CPI for December was 0.5% MoM, higher than expectations of 0.4% and matched expectations of 7.0% in YoY terms. Core measures printed at +0.6% MoM and +5.5% YoY with both higher than expected by 0.1%. US inflation at a 40-year high……
Stocks rallied, although indexes gave up gains unevenly ahead of the close, while government bond yields ticked lower, sending the American dollar in a selling spiral, exacerbated by the breakout of technical levels. The AUD/USD rallied almost 80-pips, from 0.7209 up to 0.7281, three hours following the release of the US CPI. The rally stalled around the 100-day moving average (DMA), which lies at 0.7286, short of the 0.7300 figure.
Overnight Currency Range
AUD/USD 0.7200 0.7292
EUR/USD 1.1355 1.1453
GBP/USD 1.3625 1.3714
USD/JPY 114.38 115.5
NZD/USD 0.6775 0.6854
USD/CAD 1.2495 1.2580
USD/CNH 6.3605 6.3773
AUD/JPY 82.99 83.67
AUD/NZD 1.0622 1.0648
AUD Thoughts
Along with high inflation and strong labour data, there should be no shortage of USD positive catalysts over the coming months, and this is in sharp contrast to EUR, where the ECB is sticking to its more transitory narrative, and where political event risks are rising.
The AUD/USD peaked at 0.7292 after earlier trading to a low of 0.7200. Further resistance can be found ahead of 0.7340 and again at 0.7430 while demand has likely followed spot higher and rests ahead of 0.7200.
Event Risk Data Today
UK – December House Prices
US – December PPI and Weekly jobless claims