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Forex Today: Markets Expect Falling US Inflation Data Today

Markets are keenly awaiting today’s release of crucial US CPI data, which is expected to show a fall from last month’s data. The result will likely impact stock and Forex markets, especially the US Dollar.

  1. There will be a release today of US CPI (inflation) data which is expected to show a decline in the annualized rate from 3.3% to 3.1%. However, the month-on-month change is expected to tick higher from 0.0% last month to 0.1% this month. Higher than expected inflation will almost certainly trigger a selloff in stocks and boost the US Dollar, lower than expected data will have the opposite effect.
  2. We saw stock markets continue with their bullish moves to new record highs. This bullishness is seen as led by technology stocks, and has followed right through today’s Asian session, with stocks trading near their highs approaching the Tokyo close. We are seeing new all-time high prices in the NASDAQ 100 Index and the broader S&P 500 Index. Most global equity indices are bullish, with Japan again the standout today as the Nikkei 225 index has risen to close at a new record above 42,000. The Japanese TOPIX has also risen today to trade at a new all-time high. These are bullish signs for equities and trend traders will want to be involved here on the long side.
  3. In the Forex market, the New Zealand Dollar is the strongest major currency since the Tokyo open, while the US Dollar is the weakest, putting the NZD/USD currency pair in focus. The USD/JPY currency pair continues to exhibit a valid bullish long-term trend and trend traders will still want to be involved here, especially as recent highs near ¥162 are being threatened.
  4. UK GDP data released earlier today showed a stronger than expected increase, with a month-on-month gain of 0.4% when only 0.2% was anticipated. The Pound ticked a bit higher on the news, but is looking quite bullish anyway, with the GBP/USD currency pair earlier trading at a new 4-month high price.
  5. There will be a release later today of US Unemployment Claims data.

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