US Markets Steady Ahead of Inflation Data
US Markets took a bit of a breather yesterday as investors eyed up key inflation data due out later today. The major indices experienced a mixed day, the Dow closing up 0.12%, the S&P dropping 0.11%, and the Nasdaq falling 0.41%. The dollar notched up a small gain against the major currencies, the Dxy pushing 0.2% higher as US Treasury yields also moved up, the 2-year gaining 5 basis points to trade back up to 4.536% and the 10-year adding just 1 basis point to 4.098%. Oil prices remained steady, Brent rising 0.16% to $82.21 per barrel and WTI losing 0.1%, down to $77.93 per barrel. Gold prices remained bid, the precious metal trading around $2,184 having hit another fresh high on Friday a fraction under $2,195.00 per ounce.
FX Traders Poised for Big Moves with Data and Central Banks Ahead
Foreign Exchange traders are poised for some big moves in the market as they look ahead to some key data points and a raft of central bank updates next week. The Yen has already seen some strong moves on the crosses and against the greenback with the market now pricing in the possibility of the Bank of Japan ending its negative rate regime as early as next week. We have key inflation data tonight in the states, and although this will have zero effect on next week’s Fed decision the impact on the predicted rate cut in June could be significant. In addition to the BOJ and the Fed, we also have the Reserve Bank of Australia, the Swiss National Bank, and the Bank of England all set to deliver rate calls next week and for longer-term players looking at interest rate differentials, these could signal the start of some fresh long-term trends.
US CPI Data the Main Investor Focus Today
Traders are expecting to see volatility to pick up today with key data releases scheduled across the trading sessions, culminating in the key CPI numbers in the United States. Japanese PPI numbers are in focus in the Asian session, and a strong number could further expectations for a change of stance from the BOJ next week. The UK is in focus early in the European day with the release of the latest employment data which should see increased volatility in the pound. However, the main highlight of the day, and possibly the week will be the release of the CPI data in the US, the expectation is for a 0.3% increase in the core number, and anything further north than this could once again push back rate cut expectations along the curve. Later in the day, bond markets will be focused on the latest 10-year Auction with the treasury set to sell $39 billion of 10-year notes.
