Trade ideas thread - Friday, 20 December, insightful charts, technical analysis, ideas

From Japan today we had inflation data for November. Inflation rates moved solidly higher, well above the Bank of Japan 2% target level, above expectations, and above October levels. The "core-core" inflation rate, which strips out prices of fresh food and energy and is the closest to the US measure of core inflation moved to its highest level since April.

Despite this the yen slid even lower, with USD/JPY ticking to 5-month highs above 157.90.

Then we had intervention type comments from Japan's finance minister Kato. He used forthright words such as:

which are indicative of a greater degree of concern.

It took some time, but eventually the yen displayed some strength, with USD/JPY dropping back towards 157.15 and thereabouts. Its since been a little lower.

China left its benchmark lending rates unchanged, as expected, at the monthly fixing today.

These rates were last cut in October; the 1-year by 25bp from 3.35% and the 5-year also by 25bp, from 3.85%. These cuts were the largest since the LPR reform in August 2019 and marked the third reduction in 2024.

In other news the US government moved closer to a shutdown. A bill aimed at furthering funding for the government, promoting Trump's recommendation to further expand US government debt failed in the House in Congress. Republicans have a majority in the House but many disagree with fiscal profligacy.

Still to come is the critical US inflation data - PCE - at 8.30am US Eastern time. There is a 'ranges to watch' preview above.

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As I was posting we had more intervention type comments from Japan, this time from Atsushi Mimura, Japan's vice finance minister for international affairs, AKA 'top currency diplomat'. USD/JPY is little changed on these so far.