Today market outlook

[Zeologic]

GBP/USD appears a reversal pattern near the lower band

The GBPUSD pair fell to a low of 1.20998 on Monday, but there was buying pressure which then brought the price to a close at 1.22014 and drew a long wick at the bottom of the candle like a Pinbar. Yesterday the price was still drawing an indecision candle with a high of 1.22501, a low of 1.21376, close at 1.22124 near the lower band. The RSI level showing a value of 30 is considered the oversold zone level.

Yesterday's release of US PPI data showed producer inflation grew slower than expected in December, weighing on the USD and bringing the dollar index (DXY) to depreciate from 109.570 to 109.178. Economists expect the core PPI to rise to 3.8%. Month-on-month headline PPI rose modestly by 0.2%, while core PPI remained flat.

On the other hand, the Fed's expectation that it will reduce interest rate cuts this year is still driving the strengthening of the USD. According to the CME group's Fedwatch tool, the probability of the Fed not reducing interest rates at its January 29 meeting is 97.3% and the probability of a decrease is only 2.7%.

Today investors will focus on UK and US inflation data, the UK annual CPI is estimated at 2.6%, the same as the previous period. Meanwhile, the US CPI is expected to rise 2.9% from the previous 2.7%.

[Zeologic]

The AUD/USD pair extends gains ahead of the release of unemployment rate data

Yesterday the AUDUSD pair drew a bullish candle with a slightly long body extending the previous increase. This pair experienced three consecutive days of increases since Monday at the start of this week. Yesterday the price formed a high of 0.62466, a low of 0.61812, and closed at 0.62251. The price increase of the AUDUSD pair has crossed the middle band line from the downside.

Although in the long term, the Australian dollar tends to weaken against the US dollar, this week for three consecutive days the Australian dollar strengthened trying to gain balance against the US dollar. The US dollar's strong rally began in October due to the influence of President Trump.

The dollar index (DXY), which tracks the USD currency against six major currencies, was a surprise after the release of US CPI data which brought the DXY down to a low of 108,602 from a high of 109,346. Meanwhile, the Australian Dollar extends its weekly rebound further above the 0.6200 mark, opening doors to test the 0.6300 hurdle in the short term.

On the other hand, the RBA will consider lowering interest rates in February, citing sluggish economic momentum and reduced inflation risks, even though the chance is only 62%. Australia faces the challenges of weaker-than-expected Q3 GDP growth and a decline in consumer rates in January. Sluggish commodity prices and concerns about China's economic slowdown are weighing on Australia as China is one of the main drivers of Australia's exports.

Today investors will focus on Australian jobs data and US retail sales as well as jobless claims.

Australia's Employment Change is estimated to add 14.5k from the previous data of 35.6k with the Unemployment Rate forecast to rise 4.0% from the previous 3.9%.

Meanwhile, US Core Retail Sales are forecast at 0.5% from the previous 0.2%, and unemployment claims are forecast to rise by 210k from the previous 201k.

[Zeologic]

GBP/JPY lost ground for the second day in a row under pressure from UK GDP

Yesterday the GBPJPY pair drew a bearish candle with a long body extending the previous candle. The price of the GBPJPY pair formed a high of 191,540, a low of 189,638, closing at 189,731. The pair extended its decline for the second day in a row after ending consolidation near the lower band.

The UK economy returned to growth in November, with Gross Domestic Product (GDP) rising by 0.1%, after contracting 0.1% in October. However, this fell short of market expectations for a 0.2% expansion. The Services Index for October remained unchanged at 0% q/q, compared with 0.1% in October. In November, Monthly Industrial Production and Manufacturing fell by 0.4% and 0.3% respectively, with both figures coming in below market expectations.

On the other hand, investors increased their expectations of a BoE interest rate cut after data showed an unexpected decline in inflation even though it was still above the 2% inflation target. The UK Consumer Price Index (CPI) increased by 2.5% year-over-year in December, down from 2.6% in November and below market forecasts of 2.7%.

From Japan, the JPY's strengthening was supported by increasing expectations of a BoJ interest rate hike next week. According to Bloomberg, citing unnamed sources, the BoJ is likely to raise interest rates next week unless there is significant market disruption after the inauguration of US President-elect Donald Trump.

Today investors are waiting for the release of UK retail sales data with expectations of an increase of 0.4% from the previous 0.2%.

[Zeologic]

Gap down on the USD/CNH pair at market opening this week

In weekend trading the USDCNH pair drew a bearish candle with a short body and shadows on the top and bottom of the candle with a high of 7.3577, a low of 7.3329, a close of 7.3404 on FXOpen. At market opening, there is a gap down, the opening price is far below the previous closing price. Today's opening price was at 7.3285 and tried to rise to recover the gap.

Traders today will be looking forward to the inauguration of Donald Trump as American president with the possibility that there will be important information regarding the level and size of incoming import tariffs. Analysts estimate that these import tariffs will increase inflation and impose obstacles on America's trading partners to some extent. Especially against China, which in the Trump campaign will increase tariffs to more than 60%. Of course, this will affect China's exports to America at higher costs.

In two weeks the Yuan currency strengthened slightly, this was supported by China's GDP annual growth of 5.4% in the fourth quarter was the best in 18 months and exceeded expectations by almost half a percent, indicating the fiscal stimulus in 2024 has been successful.

US economic growth is still better than China's, but the US will face challenges from inflation which is expected to soar. Unemployment in China remains relatively high at 5.1% compared to 4.1% in the United States.

Investors may be waiting to see how geopolitical developments will develop after Trump implements import tariffs, this could trigger a trade war between China and the US again with escalation in the next few weeks.

Today China will release the 1-y Loan Prime Rate which is predicted to be the same as the previous revision of 4.10% and the 5-y Loan Prime Rate is predicted to be 3.60%. Investors use this data for currency valuation and predicting how interest rates will change in the future.

[Zeologic]

USD/CAD plunges amid Trump's inauguration

Yesterday the USDCAD pair drew a bearish long-body candle and a small shadow at the bottom of the candle. The candlestick represents the weakening of the USD and the strengthening of the Canadian Dollar amidst Trump's inauguration as US president. The price of the USDCAD pair formed a high of 1.44850, a low of 1.42611, and a close of 1.43111. The dollar index (DXY) fell from a high of 109.35 to a low of 107.92 amid Trump's inauguration. The dollar index is used to measure the performance of the US dollar against six major currencies.

Even though yesterday's US bank holiday was in commemoration of Martin Luther King Jr. Day, Trump's inauguration gave a boost to the financial markets where investors were looking forward to this moment and seeing developments in Trump's speech at his inauguration. This weekend has already seen Trump in the spotlight. His pledges to issue nearly 100 executive orders on the first day mean that traders and investors will have a lot to consider as they assess the market's future potential.

Many investors worry that Trump's policy on tariffs could spark a trade war, but Trump's words may help ease some of the fears that have been present in financial markets of late, as claims of constructive discussions with Xi Jinping signal a perhaps less confrontational approach to tariffs than previously suggested. worried.

Today Canada will release the CPI which is expected to fall -0.7% from the previous 0.0%. Median CPI is expected to fall 2.5% from the previous 2.6%. Annual Trimmed CPI is expected to fall 2.5% from the previous 2.7% and annual Common CPI is also expected to fall 1.9% from the previous 2.0%.