Japanese Inflation in Focus as USD/JPY Tests Tokyo’s Resolve

(AI Video Summary)

Nvidia and US stocks have been the star performers last week, sending the S&P 500 to a fresh all-time high and lifting global risk sentiment in the process. On the back of improved risk sentiment, the US dollar trades lower, testing its 200-day simple moving average.

On the economic front, things have been a bit quiet. The lack of data on Monday has led to lower trading volume. However, Japanese inflation just before midnight on Monday should attract a lot of attention given the focus wages and prices in the lead up to the anticipated policy shift from the Bank of Japan. Inflation seems to be easing, despite recent comments from the Bank of Japan. This could potentially cause the Japanese yen to lose some of its value. Over in the US, we’ll be keeping a close eye on the second estimate of the Q4 data and the Reserve Bank of New Zealand’s monetary policy update.

Then looking at Europe, the Bundesbank has hinted at a possible recession, so Germany’s unemployment and inflation data will definitely be worth watching. Speaking of inflation, the Federal Reserve’s preferred measure, the PCE data, will take center stage this week. It’s expected to show slight declines on a yearly basis but a 0.4% increase in prices from a monthly perspective. Meanwhile, across the pond in the UK, it is quieter on the economic calendar front, but cable (British pound) is performing admirably, after previously finding support at its 200-day simple moving average.

In the land of commodities, the shining star is gold. It has made an impressive recovery thanks to the struggling US dollar. However, it is now testing a resistance level, which could put a damper on its rise. On the flip side, oil prices have taken a bit of a tumble after a period of consolidation. Chinese and Asian markets starting the week on the back foot has also weighed on oil prices to a degree as the global growth outlook remains bleak.

As the curtains rise on the US equity market, it is expected to open flat. However, taking a step back, the S&P 500 continues its thrilling ascent.