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Forex Traiding

There are too many signals that the demand for risk is weakening. The dollar is preparing to regain leadership. USD, CAD, JPY overview



DATE OF PUBLICATION: 2021-01-13 18:11:34 As expected, consumer inflation in the United States rose more strongly in December than in November – from 0.2% m / m to 0.4% m / m, an annualized growth of 1.4% versus 1.2 % a month earlier, which turned out to be even higher than the forecasted 1.3%. The dollar received additional grounds for strengthening, as stronger inflation means, among other things, a faster approach to the normalization of the FRS monetary policy. After the publication of inflation data, most stock indexes in Europe went into the red zone, oil prices are falling, the price of gold and bonds are rising. The reversal in favor of defensive assets is not yet stable, however, we must proceed from the fact that in the coming days demand for the dollar will grow, but risky assets will be under pressure. USDCAD The Bank of Canada released a quarterly review of the business climate in Canada, which by most parameters confirmed the in the fall, the trend towards a gradual recovery after the failure in the first half of the year. Business sentiment has improved, with most firms reporting growth in investment plans and the labor market, but there are several circumstances that undermine the positive developments. Firstly, it is expected that inflation in the next 2 years will not rise to 2%, which indicates disbelief in the recovery in demand, and secondly, sales growth in the 4th quarter, when all restrictions were lifted, still turned out to be at the level of the crisis 2008 / 09 The Canadian has been in an impressively strong uptrend since last March, but the likelihood that this trend is ending is growing. The settlement price twice during this time, in August and September, tried to turn up, but the corrections were shallow. We are now witnessing a third attempt, the target price is moving above its long-term average, although there are still no technical signs of a reversal at the moment. The likelihood that a long-term low was formed on January 6 is growing. If the CFTC report on Friday shows a decline in the long position in CAD, which as of January 5 was quite impressive at 1.146 billion, then this will give additional arguments that the reversal has already taken place. Hence the conclusion – you can try to enter long positions with an eye at 1.31, stop below 1.2625 USD / JPY The yen has a chance to resume gains amid growing concerns that commodity gains may slow or even stop in the coming weeks, reflecting growing risk appetite. Mizuho Bank notes that the London Metal Exchange is down sharply went copper futures, and associates the fall in prices with the increase in the coronavirus threat in China. China was able to suppress the virus early on with a hard lockdown and reopened its economy faster than the US or Europe, but recent news indicates that a new outbreak is possible in China. Chinese authorities are aiming to conduct a large-scale vaccination program before the new year begins. the lunar calendar, but time may not be enough, and therefore an alternative way to contain the epidemic will be launched – a hard blocking of cities. If that happens, a reversal in commodity prices will be inevitable. The yen target price has long been poorly informed as USDJPY has been declining for several months due to dollar weakness, even with rising commodity prices. But the last few weeks have seen a steady rise in the long speculative position in futures, which should also work on the spot. If the Japanese authorities do not dare to intervene, then USDJPY will continue to decline due to risk aversion. As long as the yen is above the March minimum, intervention is unlikely, therefore, short selling with the target at 102.60, stop at 104.50 is justified, in case of a downward movement, the target will shift to 101.20. It is dangerous to forecast a deeper decline due to the fact that the Bank of Japan will most likely be forced to intervene in order to prevent the yen from strengthening below 100. Material provided by InstaForex – www.instaforex.com Source – InstaForex

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