US OUTLOOK/OPINION: JPMorgan Below Consensus For Core CPI
- JPMorgan see headline CPI at 0.30% M/M and core CPI at a more modest 0.23% M/M. If realized, the latter would see 3.1% Y/Y for its lowest since Apr 2021.
- “There is some risk that inflation will once again firm to start the year due to residual seasonality, but we think that many of the factors that boosted inflation readings during the first quarter of each of the past two years reflected either idiosyncratic factors or pressures that have since abated to some degree.”
- They expect core to continue to be supported by a 0.3% M/M increase across the major shelter items: OER, tenants' rents and lodging. "We continue to expect a fairly gradual — and occasionally choppy — cooling in shelter inflation based on various measures that appear to have some leading properties; our forecasts for January are marginally lower than their December readings.”
- “Another key contributor to CPI inflation dynamics since the pandemic has been the prices of new and used vehicles. However, industry data suggest that both should have been close to flat for January.”
- “We look for apparel prices to have declined for the first time in three months. A firming trend in the US dollar and the after-effects of some potential earlier front-loading around the risk for port strikes likely put downward pressure on the apparel price index, although we see a risk that tariff uncertainty could have led to front-loading in January that would put upward pressure on prices.”
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USDCAD TECHS: Trend Structure Remains Bullish
- RES 4: 1.4674 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4424 @ 19:40 GMT Jan 10
- SUP 1: 1.4337/4280 20-day EMA / Low Jan 6
- SUP 2: 1.4232 Low Dec 17
- SUP 3: 1.4181 50-day EMA
- SUP 4: 1.4011 Low Dec 5
The trend set-up in USDCAD remains bullish and the recent move down is considered corrective. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. 1.4337, the 20-day EMA, has recently been pierced. A clear break of the average would open 1.4181, the 50-day EMA.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6374 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6257/0.6302 20-day EMA / High Jan 6
- PRICE: 0.6148 @ 19:39 GMT Jan 10
- SUP 1: 0.6140 Low Jan 10
- SUP 3: 0.6100 Round number support
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.5994 1.618proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and Friday’s sell-off reinforces this theme. The pair has breached support at 0.6179, the Dec 31 low, maintaining the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too. Scope is seen for an extension towards the 0.6100 handle next. Initial firm resistance to monitor is 0.6257, 20-day EMA. The 50-day EMA is at 0.6374.
EURJPY TECHS: Monitoring Support
- RES 4: 166.34 2.0% 10-dma envelope
- RES 3: 166.10 High Nov 6
- RES 2: 165.04 High Nov 15 and a key short-term resistance
- RES 1: 164.55 High Jan 7
- PRICE: 161.70 @ 19:37 GMT Jan 10
- SUP 1: 160.91 Low Jan 2
- SUP 2: 160.54 50.0% retracement of the Dec 3 - 30 bull cycle
- SUP 3: 159.51 61.8% retracement of the Dec 3 - 30 bull cycle
- SUP 4: 158.67 Low Dec 11
EURJPY remains below the Dec 30 high. The recent move down appears corrective and a bullish short-term condition is intact, despite the pullback from last week’s high. The next support to watch lies at 160.54, 50.0% of the Dec 3 - 30 bull cycle. The 61.8% level is at 159.51. A resumption of gains would open 165.04, the Nov 15 high. Clearance of this hurdle would expose 166.69, the Oct 31 high and a major resistance.
