Markets Stall Ahead of Key Inflation Data
US Stock markets had a quiet day yesterday ahead of key inflation data later today, all three of the major indices closed close to flat. The Nasdaq gained just 0.03%, whilst the Dow and the S&P dropped 0.03% and 0.04% respectively. Treasury yields did push higher with the 2-year gaining 4 basis points to trade up to 4.79% and the benchmark 10-year yield adding 2 basis points to 4.42%. Currencies were relatively quiet, although many are keeping a keen eye on the UsdJpy which is flirting with the key 152.00 level again. Oil prices dropped as traders observed more signs of easing tension in the Middle East, with Brent trading back to $91 per barrel and WTI at $86.85 per barrel. Gold remained bid, near record highs, trading around the $2,344 per ounce level at the New York close.
FX Traders Wary of Japanese Intervention
Foreign Exchange traders are carefully monitoring developments in UsdJpy today as the pair flirts again with the 152.00 level. Many expect that there will be intervention from Japanese authorities if the currency breaks higher which could lead to substantial volatility for the Yen against both the greenback and on the crosses. More than 60 billion dollars were sold back in 2022 when they last intervened, and traders are anticipating that if they come in again this week it could be with an even bigger bat. As always in these situations, timing will be crucial, and it may not be the price that dictates the move, but volatility and with the key US CPI data out, we could see some very messy moves into the end of trading today.
Calm Before the Storm on the Event Calendar
It is set to be a relatively quiet day for traders today ahead of a storm of updates tomorrow if the macroeconomic calendar is to be any indication. The Asian session has just confidence numbers from NAB and Westpac due for Australia during the day and the European session has only the French trade Balance date which is unlikely to move any dials on its release. It’s a similar story for the New York day with nothing major on the schedule, however as mentioned previously, there are several sectors where markets are trading at precarious levels, and we could end up seeing a lot more volatility before the end of trading today than many would anticipate.
