Major currencies are mostly steady at the moment, with the Japanese yen being the only one showing some movement as we transition from Asia to Europe. Following the BOJ policy decision where rates were left unchanged as anticipated, USD/JPY experienced some volatility but is now slightly lower at 152.85. The pair is currently dipping below its 100-hour moving average of 152.97, which could signal a loss of control for buyers if the key level is breached. Despite this, buyers seem to be facing exhaustion as they test a crucial Fib retracement level.
Although the price is still holding above the 200-day moving average of 151.50, all eyes are now on the euro as we await more inflation data in European trading. Recent reports from Spain and Bavaria showed an increase in CPI figures for October, indicating a rise in price pressures. This trend is expected to continue in the upcoming French and Italian readings. However, the focus will be on the Eurozone core annual inflation reading, where core prices are projected to decrease to 2.6% from 2.7% in September.
Despite this estimate, recent data from Spain and Germany have shown an uptick in core prices, suggesting a potential deviation from the projected trend. While it may be too early to draw conclusions from a single month of data, it is evident that there are challenges in the disinflation process. Traders are currently pricing in a 91% chance of a 25 bps rate cut by the ECB in December, which has decreased from full pricing before the recent data releases. This shift in expectations could pose upside risks for the euro in the upcoming sessions.
Looking ahead, key economic data releases scheduled for today include Germany’s September retail sales data, import price index, France’s October preliminary CPI figures, Italy’s October preliminary CPI figures, Eurozone’s October preliminary CPI figures, and US October Challenger job cuts and layoffs data. As we navigate through these reports, I wish all traders the best of luck in their trading activities and urge everyone to stay safe during these uncertain times.
