Inflation data from the United States released on Tuesday showed an increase in the Consumer Price Index in November of 0.1% below the 0.3% of market consensus. According to analysts from TD Securities another moderation in monthly core CPI helps to reaffirm that the USD peak is here.
“This print risks making the upcoming Fed meeting moot as claims of a "somewhat higher" terminal rate become harder to price in. USD positioning unwind flags overdone but with the risk that the ECB sounds and acts more hawkishly than the Fed this week means that a USD reversal is not harder to come by.”
“Near-term, we think USDJPY will remain heavy and risk a more significant break of the 200day especially if the Tankan survey shows more price passthrough (output prices are already at multi-decade highs). Strategically, we think a theme of divergence will dominate the yen (from a bullish side) as inflation peaks elsewhere (while it runs up further in Japan) and global central banks downshift or stop tightening (while the BOJ alters YCC).”
“For EURUSD, 1.0620 should be key resistance/pivot short-term, but the EUR was one of the first to lead USD underperformance so the risk here is that the move is tactically matured. We think this could be more likely on some crosses like the JPY.”
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