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Market reactions have been very muted and mixed, even if the CPI report came out with a small but positive surprise.
For those who are discovering the number, US Headline CPI came in as expected (0.287 unrounded Headline vs 0.30% expected).
The Core CPI number was however the more welcomed surprise, coming in at 0.2% (0.227%) vs 0.3% expected – This is what the FED prefers for their decisions.
For Canadian Data also, CPI Came in as expected (1.79% y/y, slightly stronger core)
Reactions have been a bit underwhelming overall, not what could have been expected. Nonetheless, more participants will be coming into the Market at 9:30 for the open, which may trigger some further volatility, totally absent for now.
Markets will need bigger surprises to move more, and except for Nasdaq and S&P Futures that are rising (slowly) on the news, it seems that players are waiting for something else to be on the move.
Let’s take a look at US Dollar charts to see where we are after the CPI report.
US Dollar Index 4H Chart
Source: TradingView
The Dollar has been grinding upwards since the 1st off July, now hanging around the 98.00 handle since yesterday with buyers showing some hesitancy.
It could have been assumed that participants would await for the number to move forward with the Dollar buybacks, but for now the 4H Candle is a doji.
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Look at the 98.00 PIvot Zone (+/- 15 pips) for immediate strength:
A break above would point towards a test of the 98.50 level that was key support on the way down, the next main resistance is closer to 99.00
A break below would look to test the 97.60 Support in confluence with the bottom of the Upwards Channel from this month that will need to hold to avoid resuming the main downtrend.
US Dollar Index 30M Chart
Source: TradingView
Looking closer shows further the lack of volatility from the data, with the Dollar Index confined within at 80 pip range – Other currencies have shown some wicks but no immediate reactions.
Data high in DXY: 98.15 – Low: 97.35, watch for any breakout beyond these points.
We will follow closely what the market is waiting for to start moving as the North-American session is still young and some geopolitical turmoil might start to be into play between Ukraine and Russia - keep an eye on the news.
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