SOUTH AFRICA: SARB Governor Kganyago Calls For Lower Inflation Target

• It was a very tight range for Bund overnight, but this was quickly broken after the UK CPI came below expectation, helping the contract jump 19 ticks to test a new intraday high.
• Regardless of the early price action, the contract remains under serious pressure, after having lost 690 ticks from the 2nd of December high to Yesterday's low. a one way price action.
• The German 10yr yield has cleared the July high Yesterday, and should again be quoted close to that level, equated to 130.47 Yesterday.
• Investors will now be staring at the 2024 high printed in late May at 2.706%, this equated to 129.89 Yesterday.
• Resistance will be at Yesterday's high of 131.09 initially.
• Today sees, France, Spain Final CPIs, and of course the US CPI.
• SUPPLY: UK £4bn 10yr (equates to 30.5k Gilt) should weigh into the bidding deadline, Germany 2053, 2054 (equates combined to 17.6k Buxl) could weigh.
• SPEAKERS: ECB Lane, Guindos, Villeroy, Vujcic, Fed Kaskari, Williams, Goolsbee, BoE Taylor.

• RES 4: $2762.3 - High Nov 1  
• RES 3: $2730.4 - 76.4% retracement of the Oct 31 - Nov 14 bear leg
• RES 2: $2726.2 - High Dec 12    
• RES 1: $2698.0 - High Jan 10     
• PRICE: $2682.2 @ 07:19 GMT Jan 15
• SUP 1: $2644.3 - 50-day EMA   
• SUP 2: $2596.2/2583.6 - Low Dec 30 / 19
• SUP 3: $2564.4 - Low Nov 18 
• SUP 4: $2536.9 - Low Nov 14 and a key support 

Recent gains in Gold appear corrective - for now. However, the yellow metal continues to hold on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2644.3, the 50-day EMA.

Looking through the details here we have services notably softer than expected at 4.37%Y/Y. Core goods and food/alcohol a little higher than expected (so less of a surprise in core / headline).

• Air fares are soft. Only rising 16.2%M/M in December - the expectations we had seen for that were around 40-45%M/M (remember this is NSA data). They alone contributed to headline CPI falling 0.14ppt and around double that for services CPI.
• Accommodation services also soft - contributing -0.07ppt to headline CPI.
• Cultural services -0.04ppt contribution.
• Other than that clothing and tobacco (both expected to contribute negatively).
• At first glance this doesn't look very broad-based at all and is largely the most volatile components contributing almost entirely to the downside in services / core / headline CPI.
• GBPUSD hit a low of 1.2163 but is around 20 pips higher at the time of writing.