USDJPY – US Inflation lifts the pair back to 114.00


US inflation in October continued to rise significantly above market expectations. Monthly inflation was 0.9%, above the 0.6% forecast and above the 0.4% in September. Annual inflation was higher at 6.2%, above the 5.8% forecast and above the 5.4% in September. This is the highest inflation rate in thirty years since November 1990. As a result, the Dollar (USDIndex) hit a new 14-month high of 94.90 this morning, in line with the US 10-year Treasury yield which jumped 1.59% before dropping to 1.57% this morning.

The strength of the US Dollar brought the USDJPY pair back up to the 114.00 test again and was absorbed by the Japanese stock market this morning. Because the depreciation of the Yen has a positive effect on exports and attracting foreign investors, the Nikkei 225 index this morning was +0.75% at 29,325. Meanwhile, other Japanese economic data this morning included the Producer Price Index (PPI) for September, which continued to rise for the eighth month at 8.0%, above the 7.0% expected by the market. It was the highest producer price inflation figure since December 1980, mainly driven by rising prices for food and beverages, chemicals, as well as petroleum and coal products.

Japan’s October Inflation Report (CPI) will be released next week. The previous month’s annual inflation was 0.2% and was the first positive since August 2020.

From a technical point of view, although USDJPY was able to rise above the MA50 and MA200 again, with a positive view from the MACD histogram rising above the 0 line, overall the pair remains stuck in the downtrend in the H4 time frame. The price is testing the upper zone 114.00; if it can penetrate up to the next resistance zone, the previous high at 114.40 in turn may be adjusted down. If the MA50 line at the 113.70 zone is broken down there will be the next support at the MA200 line at 113.00.

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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand

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