US inflation data will be released later today which is widely expected to show an unchanged annualized rate of 5.0% and a fall in core CPI to 0.3% from last month’s 0.4% rise month-on-month.
- Markets are strongly focused on the release later today of US inflation data, which is the main driver of the Fed’s decisions on interest rates. Annualized CPI is expected to remain unchanged at 5.0%, still well above the Fed’s 2% target. Core CPI is expected to decline from a 0.4% increase to a 0.3% increase month on month, while the main CPI rate is expected to rise from 0.1% to 0.4%. Lower than expected inflation will likely boost risk assets, while any higher-than-expected data will probably be positive for the US Dollar and the US 2-Year Treasury Yield.
- In the Forex market, the US Dollar has risen against its long-term bearish trend for a second day. The Asian session has been very quiet, with little directional price movement. The long-term bearish trend in the US Dollar remains valid, and trend traders may also be looking for long trades in the EUR/USD and GBP/USD currency pairs, both of which recently tested long-term highs.
- Stock markets are mostly declining very slightly, although prices remain quite near recent highs.
- Precious metals are performing strongly within a slow bullish trend after Gold reached a high price just below its all-time high of $2,070 last week.
- Some soft commodities have been breaking to new highs and trending strongly, notably the Sugar ETF Cane which ended the week with a strong rebound, and the Cocoa ETF NIB, which closed yesterday at a multi-year high price.
- It is likely to be a relatively quiet day until the US CPI data release at 1pm London time, when markets will likely explode into life.