Trading plan for 10/01/2019:
Chinese data disappoints the global investors
Trade was non-directional during the Asian session. USD generally remains weak under the influence of a mix of factors: change in Fed tone, government shutdown, technical break. The sentiment in Asia temporarily broke down the weaker data from China, but over time the stock exchanges have risen to end up again in the end.
EUR / USD after breaking 1.15 remains high, close to 1.1550. AUD / USD temporarily (after data from China) adjusted to 0.7140, but has already returned to 0.7180. CAD and NOK are slightly weaker when adjusting yesterday's oil price increases.
On Thursday, the 10th of January, the event calendar is light in important data releases, but the global investors should keep an eye on Retail Sales data from Italy, ECB Monetary Policy Meeting Accounts data, Unemployment Claims data from the US and Building Permits data from Canada. Moreover, there is a speech scheduled from Fed Chair Jerome Powell and FOMC member Charles Evans later in the day.
USD/CNY analysis for 10/01/2019:
The Chinese CPI data published overnight disappointed the global investors as the figures were below the expectations. The investors expected a slight decrease in inflationary pressures from 2.2% to 2.1%, but the CPI decreased to the level of 1.9%. The CPI is the headline inflation figure that indicates the strength of domestic inflationary pressures. Assesses changes in the cost of living by measuring changes in the prices of consumer items.
The same situation was with the PPI data. The global investors expected a decrease from 2.7% to 1.6%, but the PPI slid to the level of 0.9%. A rise in PPI signals an increase in inflationary pressures. Given the economic instability associated with rising price levels, the central bank often will raise interest rates to check inflation. A low or falling PPI is indicative of declining prices and may suggest an economic slowdown.
Let's now take a look at the Gold technical picture at the H4 time frame chart after the data were published. Gold is treated as safe heaven when the inflationary pressures rise, but currently, there is not much of any correlation in this matter yet. The price of Gold has broken above the 61% Fibo at $1,286 and is heading higher towards the next technical resistance at the level of $1,309. The strong and positive momentum supports the short-term bullish outlook.
