Positive Market Reaction to On Expectation CPI Data
Global stock markets have once again taken a glass half full approach to key US data coming out in line with expectation, Asian bourses have followed a cautiously optimistic reaction to CPI numbers in the US where the Nasdaq closed up 0.29%, the S&P up 0.12% and the Dow down 0.2%. The data came in slightly better than expectation on 2 of the 3 prints but investors have focussed on the fact that the numbers are decreasing albeit slowly, and it is another key risk event safely navigated. The dollar dropped lower, and US treasury yields fell off whilst Oil remained bid.
ECB in Focus Today – Do They Stay or Do the Go
It is very much a live European Central Bank rate decision today with traders anticipating plenty of volatility around the rate decision, and consequent statement and press conference. Markets are skewed to the hawkish side of the argument, pricing in a 68% chance of a hike although many are pushing for a pause in the current environment and was what the market was pricing in just a couple of weeks ago. The Euro has rallied over the last couple of sessions and that sets the risk firmly on a ‘no change’ call and a more aggressive downside move on the initial release; however, traders will be paying close attention to any mentions of the dreaded ‘inflation’ word and will be quick to change their tune if the ECB takes on a more hawkish rhetoric.
Another Big Event Risk Day for Markets
The hits will keep on coming today for traders with major data releases scheduled throughout the day. We have already seen Australian employment data surprise to the topside in terms of employment change. The action comes thick and fast later today in the European and US session overlap period with the ECB rate announcement preceding US PPI, Retail Sales, and unemployment claims numbers by just 15 minutes. Traders are expecting rangebound conditions ahead of all the action but plenty of volatility around and after the event as investors get to grip with multiple updates.
