Markets Lack Direction as UK CPI Data Looms; Sterling's Path Hinges on Inflation Numbers
| Action Insight Daily Report 4-19-23 |
Markets Lack Direction as UK CPI Data Looms; Sterling's Path Hinges on Inflation Numbers |
The markets have been somewhat directionless this week, with most major currencies remaining within last week's trading ranges against one another, excluding a few Yen pairs. US stock indexes are consolidating in tight ranges with minor pullbacks, while the 10-year yield struggles below a short-term resistance level. Gold prices are recovering weakly, and oil prices are slightly retreating from last week's highs. Today's UK CPI data will be a key market focus. Sterling gained ground yesterday due to robust job data and strong wage growth, but buying pressure has not followed through. In a recent Reuters poll, 33 out of 61 economists predicted a 25 bps BoE rate hike to 4.50% at the May 11 meeting, while 28 expected rates to remain unchanged. The decision will depend on clear evidence of slowing inflation. Today's crucial data includes the expected drop in CPI from 10.4% yoy to 9.8% yoy in March and a decline in core CPI from 6.2% to 6.0% yoy. Technically, GBP/USD is visibly losing upside momentum as observed in D MACD. A downside surprise in today's UK CPI could trigger a selloff below 1.2343, potentially prompting a deeper pullback to the 55 D EMA (now at 1.2243). On the other hand, a bounce from the current level could pave the way for a break through 1.2545 resistance, resuming the overall uptrend from 1.0351. In Asia, at the time of writing, Nikkei is down -0.37%. Hong Kong HSI is down -0.49%. China Shanghai SSE is down -0.21%. Singapore Strait Times is up 0.17%. Japan 10-year JGB yield is down -0.0001 at 0.476. Overnight, DOW dropped -0.03%. S&P 500 rose 0.09%. NASDAQ dropped -0.04%. 10-year yield dropped -0.019 to 3.572. |
GBP/JPY Daily Outlook Daily Pivots: (S1) 166.20; (P) 166.60; (R1) 167.04; More... Intraday bias in GBP/JPY remains on the upside for the moment. Current rally is part of the whole rise from 155.33. Next target is 169.26 resistance first. However, considering bearish divergence condition 4 H MACD. Break of 165.38 minor support will argue that a short term top was already formed. Intraday bias will be turned back to the downside for 162.75 support instead. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 00:30 | AUD | Westpac Leading Index M/M Mar | 0.00% | -0.06% | | 04:30 | JPY | Industrial Production M/M Feb F | 4.6% | 4.50% | 4.50% | | 06:00 | GBP | CPI M/M Mar | 0.50% | 1.10% | | 06:00 | GBP | CPI Y/Y Mar | 9.80% | 10.40% | | 06:00 | GBP | Core CPI Y/Y Mar | 6.00% | 6.20% | | 06:00 | GBP | RPI M/M Mar | 0.60% | 1.20% | | 06:00 | GBP | RPI Y/Y Mar | 13.30% | 13.80% | | 06:00 | GBP | PPI Input M/M Mar | -0.40% | -0.10% | | 06:00 | GBP | PPI Input Y/Y Mar | 9.80% | 12.70% | | 06:00 | GBP | PPI Output M/M Mar | -0.10% | -0.30% | | 06:00 | GBP | PPI Output Y/Y Mar | 8.70% | 12.10% | | 06:00 | GBP | PPI Core Output M/M Mar | 0.20% | -0.20% | | 06:00 | GBP | PPI Core Output Y/Y Mar | 9.80% | 10.40% | | 08:00 | EUR | Eurozone Current Account (EUR) Feb | 10.3B | 17.1B | | 09:00 | EUR | Eurozone CPI Core Y/Y Mar F | 6.90% | 6.90% | | 09:00 | EUR | Eurozone CPI Y/Y Mar F | 5.70% | 5.70% | | 12:15 | CAD | Housing Starts Mar | 260K | 244K | | 12:30 | CAD | Industrial Product Price M/M Mar | -0.40% | -0.80% | | 12:30 | CAD | Raw Material Price Index Mar | -0.70% | -0.40% | | 14:30 | USD | Crude Oil Inventories | -0.4M | 0.6M | | 18:00 | USD | Fed's Beige Book |
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