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Daily Analysis Report 20 Jan '2022

Daily Analysis Report 20 Jan '2022


During the Asian session, the European currency grew slowly against the US dollar, developing a faint “bullish” momentum established the day before, when EUR/USD withdrew from its local lows of January 10. The single currency’s rise is mostly attributable to technical issues, although investors closely monitor inflation statistics from the United Kingdom and Europe. As expected, individual country indices continue to achieve new highs, putting significant pressure on central bank policy. In December, Germany’s consumer price index climbed to 5.7 percent, pushing the yield on 10-year German bonds above zero for the first time since 2019. At the same time, numbers on overall inflation are only likely to be released today. According to forecasts, the percentage is expected to reach 5%, with a monthly growth rate of 0.4 percent. Christine Lagarde, the European Central Bank (ECB) president, will make comments on the current situation tomorrow.


The British pound is in a mild uptrend, with a breakout target of 1.3620. Traders examine a significant set of macroeconomic data from the United Kingdom released the day before. The Consumer Price Index increased by 0.5 percent, above analysts’ projections by 0.2 percent in December. Inflation rose from 5.1 percent to 5.4 percent annually, reaching 30-year highs, while market estimates predicted a rise to 5.2 percent. At the same time, the Retail Price Index increased from 0.7 percent to 1.1 percent every month and from 7.1 percent to 7.5 percent on an annual basis, against analysts’ expectations that the indicator would remain unchanged. EVEN THOUGH THE INCIDENCE DATA REMAIN NEGATIVE, the UK government’s decision to remove COVID passports and the mask regime gave additional support for the pound. On January 25, the new rules will take effect.


The Australian dollar is rising modestly, with a breakout target of 0.7240. The “bulls” continue to build on the corrective momentum they established the day before, bolstered by favorable macroeconomic data from Australia. The December labor market report showed favorable changes: the Employment Rate climbed by 64.8K jobs after increasing by 366.1K the previous month, despite experts expecting a result of 30K. Simultaneously, the unemployment rate declined dramatically in December, from 4.6 percent to 4.2 percent, considerably ahead of predictions of 4.5 percent. For January, consumer price inflation expectations were lowered from 4.8 percent to 4.4 percent.


In Asian trading, the American currency is attempting to consolidate over 114.50 against the Japanese yen. The dollar’s position remains relatively solid against the backdrop of investors’ expectations that the US Federal Reserve would begin its monetary policy tightening cycle soon. The US currency received only marginal support from macroeconomic data issued the day before. The number of building permits issued in December jumped from 1.717 million to 1.873 million, compared to analysts’ expectations of 1.701 million. In December, the number of housing starts jumped from 1.678 million to 1.702 million, exceeding the prediction of 1.65 million. The unpredictability of Japanese macroeconomic data now supports the yen. Export volumes grew by 17.5 percent in December, 1.5 percent more than market projections. Imports fell somewhat from 43.8 percent to 41.1 percent during the same period, reducing the trade deficit from -955.6 billion to -582 billion yen.


During Asian trade, gold prices fluctuate modestly, stabilizing near new local highs and the level of 1844.00. The instrument had shown high growth the day before, in response to new evidence that consumer inflation is continuing to rise at a record rate practically everywhere globally. At the same time, investors are anxious about the US Federal Reserve’s future policies, which recognise the possibility of substantial consumer price increases but prefer to operate cautiously. The next monetary policy meeting of the regulator is set for January 25-26, and gold prices may continue to rise gradually until then.

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