Economic indicators and risk appetite
The market displayed a favorable risk appetite on Monday as the new trading week got underway. Despite this, this optimistic attitude had little backing from the fundamentals. There is still room for conjecture even when there isn’t any concrete data to back up an optimistic viewpoint on benchmarks like the Dow Jones Industrial Average. This is as a result of recent inflation figures, which gave riskier assets a brief but significant boost.
How Inflation Affects the US Dollar
The basic link between inflation and the US dollar has a significant influence on the US inflation report. However, the market’s erratic behavior and the lack of trend continuation point to turbulent underlying currents. The potential for monetary policy has been significantly impacted by the recent shift in price pressures. The Federal Reserve’s terminal rate has been anticipated by the market more recently and currently reflects the central bank’s December prediction of 5.1 percent. Despite this, the Dollar has not made significant gains, indicating that the market needs a new topic to advance.
Detailed Technical Analysis of Dollar-based Crosses
When examining certain Dollar-based crosses, there are a number of intriguing technical factors to take into account. For instance, the GBPUSD between 1.2450 and 1.2000 is noticeable, but the trend may become more complex due to event risk on the Sterling side. Similar to this, the USDJPY and the VIX as a risk-off indicator have a positive link.
Future Economic Events to Keep an Eye on:
However, it is not the only event to watch out for. The US CPI for January is one of the top event risks for possible volatility. Other noteworthy occasions include the Japanese 4Q GDP report, the UK inflation statistics release, the Chinese 1-year MLF rate update, the NFIB’s survey of US business confidence, and Fed remarks. Given the recent inflation data and their effects on the market, these events all demand special attention.