Fed Sep Cut Now Realistic after US CPI; Japan Intervenes to Boost Yen?
| Action Insight Mid-Day Report 7-11-24 |
Fed Sep Cut Now Realistic after US CPI; Japan Intervenes to Boost Yen? |
Dollar tumbled sharply in early US session following lower-than-expected consumer inflation readings. Headline CPI showed its first month-over-month decline since early 2023, while core CPI annual rate unexpectedly slowed to its lowest level since April 2021. Now, a September Fed rate cut is becoming a realistic possibility. Fed fund futures are quick to react and are pricing in near 90% chance of that. Indeed, Fed policymakers might start to rethink whether there would be one rate cut or two rate cuts this year. Simultaneously, Yen surged across the board following US CPI data. The scale of Yen's rally against other currencies suggests that Japan might be capitalizing on the current Dollar weakness to intervene and reverse some of Yen's extended depreciations. Japan has been clear about its readiness to intervene at any time of the day. Also, it has record of acting in the markets strategically, and today's US CPI data gives it a golden opportunity to act. Now, focus is on whether Yen's rebound would spiral further higher with other market participants joining in... |
USD/JPY Mid-Day Outlook Daily Pivots: (S1) 161.38; (P) 161.59; (R1) 161.93; More... USD/JPY declines sharply in early US session and breaks 160.25 support decisively. Considering bearish divergence condition in D MACD, fall from 161.49 might already be correcting the whole five-wave rally from 140.25. Intraday bias is back on the downside. Sustained break of 55 D EMA (now at 157.62) will affirm this bearish case. Next target will be 38.2% retracement of 140.25 to 161.94 at 163.65. Meanwhile, rise will now stay on the downside as long as 160.25 support turned resistance holds, in case of recovery. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 23:01 | GBP | RICS Housing Price Balance Jun | -17% | -14% | -17% | | 23:50 | JPY | Machinery Orders M/M May | -3.20% | 1.00% | -2.90% | | 01:00 | AUD | Consumer Inflation Expectations Jul | 4.30% | 4.40% | | 06:00 | EUR | Germany CPI M/M Jun F | 0.10% | 0.10% | 0.10% | | 06:00 | EUR | Germany CPI Y/Y Jun F | 2.20% | 2.20% | 2.20% | | 06:00 | GBP | GDP M/M May | 0.40% | 0.20% | 0.00% | | 06:00 | GBP | Industrial Production M/M May | 0.20% | 0.30% | -0.90% | | 06:00 | GBP | Industrial Production Y/Y May | 0.40% | 0.60% | -0.40% | -0.70% | | 06:00 | GBP | Manufacturing Production M/M May | 0.40% | 0.30% | -1.40% | -1.60% | | 06:00 | GBP | Manufacturing Production Y/Y May | 0.60% | 1.20% | 0.40% | -0.40% | | 06:00 | GBP | Goods Trade Balance (GBP) May | -17.9B | -16.1B | -19.6B | -19.4B | | 12:30 | USD | Initial Jobless Claims (Jul 5) | 222K | 239K | 238K | 239K | | 12:30 | USD | CPI M/M Jun | -0.10% | 0.10% | 0.00% | | 12:30 | USD | CPI Y/Y Jun | 3.00% | 3.10% | 3.30% | | 12:30 | USD | CPI Core M/M Jun | 0.10% | 0.20% | 0.20% | | 12:30 | USD | CPI Core Y/Y Jun | 3.30% | 3.40% | 3.40% | | 14:30 | USD | Natural Gas Storage | 56B | 32B |
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