Article by ForexTime
The Dollar sharply depreciated against a basket of major currencies on Friday after weaker-than-expected U.S. factory inflation data doused market optimism over inflation accelerating in 2018.
U.S. producer prices dished out a downside surprise by falling 0.1 in December which was the first decline in nearly 18 months. With yesterday’s soft factory inflation figures leaving a bitter aftertaste on rate hike expectations, today’s pending CPI data is a big deal and potential market shaker. The headline CPI is expected to decelerate to 2.1% y/y in December, while core inflation is predicted to remain steady at 1.7% y/y. A disappointing U.S. inflation report that prints below market expectations has the ability to fuel growing dissent within the Fed on when to raise U.S. rates. Naturally, the renewed concerns over low inflation in the States are likely to cloud prospects of higher U.S. interest rates, ultimately punishing the Dollar.
Alternatively, the Greenback could be granted a lifeline today if inflation figures offer an upside surprise and defy market expectations.
Focus will also be directed towards the U.S. retail sales figures which are expected to be +0.4% for the month of December. A retail sales figure that meets or exceeds market expectations could boost sentiment towards the U.S. economy and provide some support to the vulnerable Dollar.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Taking a look at the technical picture, the Dollar Index is unquestionably bearish on the daily charts as there have been consistently lower lows and lower highs. The decisive break down below the 91.80 support level has opened a path lower towards 91.20 and 91.00, respectively.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com