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Drumroll please, the US CPI will be out any minute
10.08.2022

The market waits eagerly for the release of the US CPI figure which is due to be announced any minute now. The US Dollar Index is showing a slight decline approaching the 106.10 level which would be the lowest point of the index in the past 24 hours. However, the CPI figure can, of course, change the trend or possibly add further momentum. What is almost certain is that the price is likely to bring high levels of volatility. Increased volatility is also likely to be experienced in other markets such as the stock market.

Developments also continue in other areas of financial trading. It has been confirmed that the US Justice Department is preparing to sue Alphabet Inc. (Google) once more in relation to its market dominance in the ad market following a probe into whether they are using fair practices. In addition to this, Disney is expected to release its earnings report later today. The company’s Earnings Per Share (EPS) is expected to be in the range of $0.97 per share which is below the $1.08 posted in the first quarter of the year. When looking at the futures market, we can see that the indIces are slightly up but still below yesterday’s market open.

Crude Oil

USOUSD - 10.08.2022.png Crude Oil 2-hour price chart on August 10th.

Oil prices continue to be influenced by tension between the West and Russia (one of the biggest suppliers of oil) as well as the gradual increase in supply which countries have been pressuring OPEC members to proceed with in order to assist with the cost of living and inflation.

The Goldman Sachs Group is one of the most recent market participants to adjust their expectations for Crude Oil from $140 to $110 in the third quarter of the year. This is a result of the deteriorating economic situation in the world, the risks of resuming coronavirus restrictions in China, where new outbreaks of the disease are periodically recorded, as well as the restoration of oil production in Russia. Many countries have been reported to have increased imports from Russia, while some European countries are rumored to have continued imports behind closed doors.

Nevertheless, experts do not exclude the resumption of the uptrend in the asset, despite the recent correction. Most economists have taken a similar stance advising that the risk of a further upward trend is still extremely high but accurate predictions cannot be made until clarity is obtained on the political picture. It should also be noted that the investment bank did not alter forecasts for next year, leaving the figure in the area of $125 per barrel.

USD/JPY

The USD/JPY pair continues to paint an interesting picture for the market and has been one of the year's strongest and lasting trends. The bullish trend which the Dollar had been experiencing had finally fallen into a correction towards the end of the previous month, however, most economists believe that the trend has the potential to continue.

The price movement over the past week has regained some of the lost value for the US Dollar and its gains are substantially larger than other major currency pairs. Though, as with most Dollar pairs, the asset is experiencing very little volatility as we edge closer to the CPI announcement and traders are watching eagerly to see whether the price will form a bullish or a bearish breakout of the price range.

USOJPY - 10.08.2022.png USD/JPY 1-hour price chart on August 10th.

The Japanese Economy has witnessed improving economic figures, however, the figures could not substantially support the Yen in the long run. This is mainly due to the pressure of inflation and the cost of living which remains high. And to make matters worse for the currency, the Bank of Japan is in no hurry to take measures to tackle this matter by altering the monetary policy. The regulator has remained dovish for months now advising that inflation remains a temporary problem and that little wage growth within the economy does not allow the regulator to tackle the issue.

Key Takeaways:

  • The US CPI figure is scheduled to be released later today.
  • The US Dollar Index fell to its lowest point in the past 24 hours.
  • The US Justice Department is preparing to sue Alphabet Inc. (Google) again.
  • Disney is expected to release its earnings report later today
  • Oil prices are struggling due to tensions with Russia, but an increase in OPEC output could ease the pressure.
  • USD/JPY regained a lot of its previous losses, but the USD remains relatively quiet leading up to the CPI report.
  • Bank of Japan refuses to implement measures to ease inflation.
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