US CPI: Lucky 7?

The US CPI for December was in-line with expectations of 7% vs November’s print of 6.8%. This is the highest reading since June 1982! The Core CPI, which strips out the volatile food and energy components of the data, was 5.5% vs 5.4% expected. November’s print was 4.9%! This is the highest reading for the core print since February 1991!

Forecasting 2022 inflation: Transitory no more?

Yesterday, at Fed Chairman Powell’s re-nomination hearing, the Fed Chairman said that the Fed will do whatever is necessary to contain inflation, including the possibility of tapering at a faster pace and increasing interest rates as long as necessary. He also acknowledged that the price pressures (inflation) will extend through the middle of this year. In addition, Powell said that that the Fed will begin shrinking the balance sheet soon after the first rate hike (2-4 meetings) and that it could shrink sooner and faster than last time (2018).

Central Banks: Liftoff in Focus?

The 7-handle figure for the headline CPI was well anticipated by the markets heading into the number. Therefore, the risk was that the print would be lower to in-line. In a “buy the rumor, sell the fact” trade, the US Dollar sold off immediately following the print. But how much lower will the DXY move before it can reverse? The US Dollar Index finally broke below the horizontal range it had been in since mid-November 2021 between 95.50 and 97.00. However, it had been in a long-term upward sloping channel since May 2021. Watch for price to test the bottom trendline of the channel near 94.90. Horizontal support below there is at 95.65 , then 93.35. Resistance above is at the 50 Day Moving Average near 95.85, then top of the recent range at 96.94/97.00 and the top, upward sloping trendline of the channel near 97.15.

Source: Tradingview, Stone X

Trade the DXY now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

As EUR/USD makes up 58% of the DXY, one may expect that it would do the opposite of the US Dollar Index. Indeed, thus far today it has. The pair broke out of a rising triangle near 1.1370 and is moving towards the top downward sloping trendline of the long-term channel the pair has been in since May 2021. The trendline offers the first resistance level near 1.1435, ahead of long-term horizonal resistance at 1.1490/1.1500. More horizontal resistance is just above at 1.1525. Support below is at the 50 Day Moving Average at 1.1337, then the bottom, rising trendline of the rising triangle near 1.1290. If price breaks below there, it can fall to the November 25^th, 2021 lows near 1.1186.

Source: Tradingview, Stone X

Trade EUR/USD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

The US CPI printed 7%, its highest level in nearly 40 years! However, the 7-handle print was widely anticipated. Watch for the “buy the rumor, sell the fact” trade until the next catalyst, which could be PPI on Thursday or Retail Sales on Friday.

Learn more about forex trading opportunities.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.