CPI

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.

USD/JPY was rising on the back of USD strength earlier in the Asian session, with USD/JPY seemingly trying to close its large weekend opening gap ahead of US CPI data. GBP/AUD has also caught our eye as its 3-wave retracement is trying to form a base around a support cluster.

The combination of a key US inflation report and finely-balanced ECB interest decision should keep EUR/USD on trader’s radars. Although we also have plenty of data out from China which could sway sentiment for risk assets, including CPI/PPI, loan growth, investment, retail sales and employment.

The Dow is holding near 18-month highs, and a break above 35,700 resistance could pave the way for a continuation toward 36K or even the record highs at 37K.

Ahead of the publication of US CPI, the EUR/USD managed to climb above the 1.10 handle although remained inside its existing ranges, suggesting traders were not opening any bold positions with the key risk events ahead. But the fact it has turned positive on the week and reclaimed the 1.10 handle was clearly a positive development from a technical point of view anyway.

Following the weaker inflation report, the major US indices all crossed above their respective highs made in June. Will the rally hold?

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.

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

The Cleveland Fed’s widely-watched Inflation Nowcast suggests potential upside risk to the release...

Thanks to another 10% CPI inflation print, interest rate expectations are on the rise again in the UK. This is putting upward pressure in the yield spread between the UK and Japanese government bonds, boosting the GBP/JPY outlook.

The weaker US inflation data supports our bullish EURUSD forecast: We think that the single currency is likely heading above $1.10 soon.

GBP/USD rises ahead of US inflation data, BoE’s Bailey. USD/CAD falls ahead of BoC & US CPI.

Today’s US inflation report could be the difference between a 25bp Fed hike or pause at their May meeting, making it a key data point to watch.

China’s consumer and producer prices continued to deflate in March, which helped further boost sentiment in today’s Asian session.

Oil prices have stabilised following OPEC’s surprise oil production cut, which now allows traders to switch their focus over to Swiss inflation, flash PMI and ISM reports.