Market Analysis – Hot CPI whipsaws markets – USD, Gold, JPY, AUD

USD was ultimately flat in a choppy session on Thursday after hotter-than-expected US CPI data. The US Dollar Index (DXY) hitting briefly breeching the resistance at 102.63 to hit a high of 102.76. This proved to be another false breakout of this level with DXY gradually retracing for the rest of the session to unchanged levels.

JPY outperformed, after an initial spike higher in USDJPY above 146 after the CPI reading, the retracement was more profound in this pair with it ultimately trading just above the psychological 145 level. A report did hit the newswires that said the BoJ is considering lowering its price outlook for FY2024 to the middle 2% range, though with dovish BoJ expectations being priced in it didn’t deter the Yen bulls.

Risk sensitive currencies GBP and AUD had a mixed reaction. GBPUSD making gains ahead of the UK GDP reading today. AUDUSD posting losses despite better than expected trade data that seemed to be interpreted as more evidence of a slowing Aussie economy.

Gold again tested the 2040 USD an ounce resistance before a spike in the USD post CPI saw a steep decline to a low of 2013. Early in the APAC session the Gold bulls look keen to test this level again with XAUUSD rebounding to around 2035. This will be a key level to watch for Gold traders.