USDCAD and USDJPY, H1
The dollar fell following the CPI figures, where the headline print was as-expected, while the core reading was a tenth cooler than forecast. EURUSD popped to 1.1763 from 1.1735, as USDJPY fell from 113.35 to 112.98 and USDCAD hit 1.2821 from 1.2566. A closing of the hourly chart below the recent swing low for USDJPY and USDCAD, at 1.2845 and 113.10, respectively, will indicate further bearish momentum for both pairs, on greenback’s weakness. Intra-day momentum indicators turned below neutral for both pairs, with RSI and Stochastic having negative slope, while Bollinger Bands extending its pattern. Next Resistance comes at 1.1210-1.2820 ( 200-hourly MA). and 112.85 (50.0 Fib level for December) respectively.
U.S. CPI rose 0.4% in November with the core rate 0.1% higher. There were no revisions to October where the headline rate rose 0.1% and the ex-food and energy component was up 0.2%. On an annual basis, CPI accelerated to 2.2% y/y from 2.0% y/y. But the core rate slowed to 1.7% y/y versus 1.8% y/y. A 3.9% surge in energy prices was the culprit behind the strength in the headline gain and more than reversed the 1.0% October decline. Transportation costs were also firm, posting a 1.9% gain versus -0.5%. Prices across the rest of the report were rather tame. Housing costs edged up 0.2%. Services prices were up 0.2%. Meanwhile, food prices were unchanged. Medical care was also flat. Apparel prices declined 1.3%. The softer readings on the core rate should take a lot of fear out of Treasuries that the FOMC might have a more aggressive rate view for 2018.
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