USDJPY drops as NASDAQ rises and rate cuts become more likely this year
US CPI data became the catalyst for indices and commodities rise, as more key events are on the table today
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The Forex.com morning brief 16 May 2024
US CPI data became the catalyst for indices and commodities rise, as more key events are on the table today
US equities and bonds rallied after weak CPI data fuelled hopes of an interest rate cut by the Fed. The markets now expect two more rate cuts this year, with the first move in September already fully priced in. The CPI data was the decisive factor, but weaker-than-expected retail sales also contributed to the dovish momentum and pushed the most important indices to new all-time highs.
SPX +1.17% to 5,308, NDX +1.49% to 18,597, DJI +0.88% to 39,908, RUT +1.14% to 2,109.
Indices:
The ASX 200 saw strength in interest rate sensitive sectors like property and technology leading the way, as yields fell.
The Nikkei 225 rose but fell short of today's highs as market participants absorbed a stronger currency, an unexpectedly sharp shrinkage in Japanese GDP. The Japanese GDP report came as a negative surprise to the markets. According to preliminary data, the Japanese economy contracted by 2.0% in the January-March period compared to the previous quarter, whereas a decline of 1.5% had been expected.
NASDAQ gained momentum after pricing in of 2 rate cuts this year, reaching another all time high.
Currencies:
EUR/USD maintained its recent gains after rising to the 1.0900 area on the back of the weaker dollar.
USD/JPY continued to be under pressure and fell below 154.00 as US bond yields fell after the inflation data.
News:
Today, Russian President Vladimir Putin began a two-day high-level visit to China, during which the two countries aim to further deepen their relations, which have intensified since Moscow's invasion of Ukraine over two years ago.
In other news, After 2 days of Gamestop (GME), AMC entertainment and other MEME stocks roaring upwards, yesterday saw up to 20% decreases in stock prices with GME down 19% as speculators are taking profits and the MEME stock hype possibly waning for now at least.
Commodities:
Spot gold was briefly just 5 points away from the USD 2,400/oz level, following the dovish reaction to yesterday’s US CPI data and at the time of writing remains around the USD 2,390/oz level.
Cryptocurrencies:
Bitcoin jumped from around USD 62,000 to USD 66,000 level, possibly due to the CPI release.
On the agenda (Munich Time):
13:30, Germany - German Buba President Nagel speaks
14:30, United States - Housing Starts for April: Forecast 1.420 million; previous 1.321 million;
14:30, United States - Building Permits for April: Forecast 1.480 mln; previous 1.467 mln;
14:30, United States - Employment data:
Continuing Initial Jobless Claims: forecast 1.780K; previous 1.785K;
Initial jobless claims 4-week average: previous 215.00K;
Initial jobless claims: forecast 219K; previous 231K;
14:30, United States - Philadelphia Fed Manufacturing Index for May: Forecast 7.7; previous 15.5;
15:15, United States - Industrial Production for April:
Industrial production: previously 0.00% y/y;
Industrial production: forecast 0.1% y/y; previously 0.4%;
16:00, United States - Fed Vice Chairman for Supervision Barr speaks
16:30, United States - FOMC member Harker speaks
16:30, United States - EIA data: Natural gas storage: forecast 76B; previous 79B;
17:30, United States - FOMC member Mester speaks
21:50, United States - FOMC member Bostic speaks
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