CPI

The EUR/USD and all other major euro crosses rose this morning, finding support from slightly stronger Eurozone data and the overall positive risk tone across financial markets we have seen in recent days. Investors were reluctant to punish the dollar more forcefully, however, as they awaited the release of key US inflation data.

With the decline in the inflation rate seemingly stalling, a higher-than-expected inflation reading is likely to be more impactful to markets.

The importance of today’s Australian inflation report has only increased following last week’s relatively hawkish RBA minutes and comments from the Governor on Tuesday. And that leaves AUD/USD vulnerable to a rally from relatively low prices should CPI come in hot. We've also seen the required pullback to support to for gold, to reconsider a cheeky long.

The EUR/USD shed more than 85 pips from the day’s high as the selling accelerated when US CPI data was released. But at the time of writing, it was testing potential support around 1.0550 area. While the slightly stronger US CPI data has given fresh life to the dollar’s bullish trend, inflation was not too hot to be a game-changer.

A soft inflation report this week may put the proverbial “nail in the coffin” for any immediate interest rate changes...

The ASX 200 has continued to show resilience around the key 7,000 support level, despite the surge on bond yields, negative sentiment and rising inflation. What if sentiment improves?

So, the inflation battle continues for the Fed as we the latest CPI data come in stronger. This should keep the dollar supported against currencies where the central bank is expected to turn dovish. The likes of the euro and pound come to mind. Gold and possibly stocks may also struggle as the renewed surge in inflation may force the Fed to hike interest rates perhaps one more time before the end of the year.

US stocks are heading for a flat start after US headline inflation rose but core inflation cooled. CPI rose 3.7% YoY, ahead of forecasts and up from 3.2% in July. Core inflation cooled to 4.3%. The data comes as oil prices continue to rise, keeping prices at the pumps elevated, pushing inflation higher. The Fed is not expected to raise rates next week, but this data keeps a November rate hike on the table.

A EUR/USD near current levels would confirm the breakout and open the door for a continuation toward the March 2022 high at 1.1185

What stocks are being discussed and traded today, and which ones are experiencing the sharpest moves before the bell?

The USD/CAD outlook is subject to a major revision this week with investors looking forward to the release of US CPI and a rate decision from the Bank of Canada.

Inflation remained higher than hoped in May, weighing on UK stocks and cementing fears that more rate hikes are needed.

USD/JPY has spent the last three weeks consolidating in a symmetrical triangle pattern but a breakout may be imminent...

Purchasing power parity (PPP) measures the cost of identical goods in different countries. It’s often compared against the exchange rate of different currencies to determine the real purchasing power of different countries’ currencies. Traders and economists use PPP to help gauge a currency’s value in relation to another.

Investors’ focus now turns back to US data as speculation over whether the Fed will hike in June continues. Watch out for fresh EUR/USD analysis from the team as the data could shift Fed bets again.

Key data prints coming out later this week may sway EUR/USD as both the ECB and FOMC continue to combat inflation.

Despite today’s weakness in the greenback, USD/JPY is still holding above a short-term bullish trend line, as well as its 50- and 200-day EMAs in the 134.00 area