🗞️ Market Awaiting U.S. CPI — Searching for Direction
🎯 Today’s Focus
January U.S. CPI
The market is in full “CPI-waiting mode.”
In Tokyo trading, price action remained choppy, with a mild USD strength / JPY weakness bias in the afternoon.
🇯🇵 Tokyo Session Overview
BOJ board member Tamura expressed a relatively hawkish stance, signaling openness to earlier rate hikes.
This briefly supported the yen, but:
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JPY buying did not sustain
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USD buying lacked conviction
The result: nervous, directionless swings.
🇺🇸 Key CPI Expectations
Market consensus:
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Headline CPI: Expected to slow
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Core CPI: Also expected to decelerate
Lower gasoline prices are seen weighing on the headline figure.
🔎 Scenario Breakdown
✅ Softer-than-expected CPI
→ Rate-cut expectations revive
→ USD selling pressure
⚠ Stronger-than-expected CPI
→ Higher-for-longer rate narrative
→ USD buying resumes
Despite the strong U.S. jobs report on the 11th,
USD buying remained limited — suggesting the market may react more strongly to downside inflation surprises.
💱 FX Overview (London Session)
🔹 USD/JPY
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Touched 153.60
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Likely to hover in the low 153s ahead of CPI
🔹 EUR/USD
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Heavy tone
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Break below 1.1850 could trigger further downside
🔹 GBP/USD
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Briefly dipped below 1.3600
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Recovery momentum limited
🔄 Cross-Yen
With USD/JPY testing 153.60:
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EUR/JPY: 182.01
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GBP/JPY: 208.79
Price action is currently USD-driven,
and cross-yen pairs are relatively calmer.
However:
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GBP/JPY slipping back below 208
→ downside risks expanding
🧭 Strategy Ahead of CPI
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Market may transition into a USD-driven trend post-release
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Volatility likely to expand sharply
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Reducing exposure before direction confirms may be prudent
📌 Summary
We are in a classic pre-event calm.
Depending on CPI:
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USD weakness may resume
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Or USD rebound could unfold
Immediately after release,
algorithmic volatility tends to dominate.
This is a day that demands discipline and composure.
