Markets Pause Ahead of Inflation Data
Global financial markets had a relatively quiet day yesterday as investors wait on inflation data tonight out of the United States. Markets fluctuated during the day, but most finished up at familiar levels. The major US indices had a mixed day, with the Dow closing up 0.29%, the S&P flat and the Nasdaq down 0.43%. US treasury yields pushed higher on the day, yet the dollar dropped against the major pairs, metals and notably against Bitcoin which surged through 30,000 for the first time since last June.
US Inflation Data The Key
Traders are heavily focused on the CPI data due out later in the New York session as they look for clarity on the next move from the FOMC. Strong job numbers and a drop in the unemployment rate on Friday suggest that inflation is likely to remain strong in the US for the short term and markets are pricing a 25bps rate hike at the next meeting in May. New York Fed President John Williams confirmed that the FOMC is still focusing on data after the recent banking crisis. The expectation is for a 0.2% m/m increase and a 5.1% for the y/y number – still well above the Fed’s 2% target level – and anything above these should see US treasury yields challenge recent highs and the dollar fly.
Bank of Canada Ahead
While the majority of the market will be focusing on the US CPI number during the North American trading session today, an hour and a half later attention will move north of the border to Ottawa and the latest rate decision from the Bank of Canada. The expectation is for no change and the rate to remain at 4.5%, however, given the recent banking crises experience in the market and Oil price moves – a key factor in trading the Loony at any time, there could be some volatility around the event as the statement is released followed by the Press conference.
