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USDJPY Strongly Rejects 115, GBP Buoyed By CPI Data

  • USDJPY experienced strong volatility on Wednesday as failed momentum above the crucial 114.70 inflection point sparked a strong reversal throughout the US trading session.
  • Falling just 3 pips shy of the 115.00 mark overnight, the pair edged back below the breakout throughout European trade. With the path of least resistance defined as lower, USDJPY weakening gathered pace with the pair trading back below 114.00 amid a degree of pressure in global equity indices.
  • AUD remained the weakest currency in the G10 space, extending the November downtrend below the 0.73 handle in AUDUSD with AUDJPY retreating well over 1%. The price action was largely in response to wage index data overnight, which showed pay growth well shy of the RBA's cited 3% requirement for rate hikes.
  • GBP traded on a surer footing, boosted by the above estimate CPI readings released early on Wednesday. Sterling gains were broad based with cable rising close to 1.35 and the cross slipping to the lowest levels since February 2020, back below 0.8400. This has opened 0.8356 next, the Feb 26, 2020 low. Initial resistance is seen at 0.8463.
  • In emerging markets, continued weakness in the Turkish lira remains the standout talking point ahead of tomorrow's central bank decision. USDTRY reached +3% gains for the second day in a row, briefly printing a high of 10.6848 before consolidating around 10.60 heading into the close.
  • New Zealand inflation expectations data scheduled overnight as well as potential comments from RBA Assist. Governor Ellis speaking at an online event. US jobless claims and Philly Fed Manufacturing Index headline the US docket before potential commentary from Fed members Williams, Evans and Daly.

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