Forex Signals Brief January 15: Attention Shifts From CPI to Retail Sales This Week

All the attention last week was on the US consumer inflation report for December, with most assets trading slowly until Thursday when the numbers were released. The headline inflation number rose to 3.4% from 3.1% while the monthly CPI showed a 0.3% increase in both the headline and core readings.

The core CPI YoY dipped to 3.9% from 4.0% in November, but it exceeded the expected 3.8% number. That gave the USD a boost but buyers couldn’t sustain it and mast assets traded in a range the whole week. The producer price index (PPI) inflation report was released on Friday, which showed a slowdown, as energy prices remain bearish. It showed a 0.2% increase, however, expectations were for a higher reading so the USD ended up lower.

Another important event last week was the SEC’s approval of Bitcoin ETFs on Wednesday, but volumes have been disappointing thus far. Bitcoin rose to $49,000 before falling back down, however, the sentiment in the rest of the crypto market remains positive.

This Week’s Market Expectations

This week the inflation reports will continue, with the UK and Canada CPI (consumer price index) report to be released in the upcoming day, although the market will be eying the US retail sales numbers on Wednesday, which we will cover that day. Today the calendar is light, however, we have the People’s Bank of China which will execute the MLF operation and we will see whether they decide to decrease the rate or keep it at 2.50%. There are some hopes for a 10-bps decrease, which would pave the way for a cut in LPR rates as well. The latest Chinese inflation numbers continue to indicate deflationary tendencies, giving the PBoC plenty of flexibility to loosen policy further. Below are the main economic events for the week:

Monday:

• People’s Bank of China (PBoC) Medium-Term Lending Facility (MLF).
• US markets closed for Martin Luther King Jr. (MLK) Day.
• Bank of Canada (BoC) Business Outlook Survey.

Tuesday:

• UK Labour Market Report.
• Canada Consumer Price Index (CPI).
• Speech by Christopher Waller, a member of the Federal Reserve.

Wednesday:

• China Industrial Production and Retail Sales.
• UK Consumer Price Index (CPI).
• US Retail Sales.
• US Industrial Production.
• US NAHB Housing Market Index.

Thursday:

• Australian Labour Market Report.
• European Central Bank (ECB) Minutes.
• US Building Permits and Housing Starts.
• US Jobless Claims.
• New Zealand Manufacturing Purchasing Managers’ Index (PMI).

Friday:

• Japan Consumer Price Index (CPI).
• UK Retail Sales.
• Canada Retail Sales.
• US University of Michigan Consumer Sentiment.

BTC/USD – Daily Chart 

Ethereum Holding the Gains Above $2,500

This year, ETH/USD has reached new highs, demonstrating that the trend has been bullish throughout the year, with moving averages pushing lows higher. Buyers returned this week after a temporary retreat, but they were unable to break the previous week’s high of $2,500. On Wednesday, the price fell to $2,127, but then recovered, with the 50 SMA (yellow) functioning as support on the daily chart, and the price soared beyond $2,500 yesterday.

Ethereum – Daily Chart

• ETH Buy Signal
• Entry Price: $1,947.38
• Stop Loss: $1,490
• Take Profit: $2,500