Two Currency Trades to Consider in January

1. USD vs. GBP:

• Key Events: US inflation data on January 13 and UK GDP data on the same day, followed by UK inflation data a few days later.
• Outlook: With US inflation expected to dip from 7.1% to 6.5%, this will be a critical factor for USD traders. The UK’s GDP and upcoming inflation data will provide further insights into the GBP’s performance. A trade against the British pound could be advantageous, considering the anticipated fluctuations in these economic indicators.

2. JPY Trades:

• Key Events: Bank of Japan (BOJ) interest rate decision on January 18 and Japanese inflation data on January 20.
• Outlook: The BOJ’s decision to widen its target for 10-year government yields while maintaining an ultra-loose monetary policy creates uncertainty. Japanese inflation, currently at a 40-year high, might see a rise, which could impact the JPY. The conflicting perspectives on inflation and monetary policy suggest that trading the Japanese yen against currencies like the US dollar, GBP, or AUD might be promising this month.

These trades offer potential opportunities based on upcoming economic events and data releases that could impact currency valuations.