UK CPI was expected to tick lower, but has made a surprisingly strong drop to an annualized rate of 3.2%.
- The Forex market got a surprise this morning with UK CPI (inflation) data falling to 3.2%, when a tick lower to a notably higher rate of 3.5% was expected.
- Precious metals remain in focus, with markets dominated by their unusually strong advance as an asset class:
- Silver has risen very strongly over the past day, trading nearly as high as $66.50, which is a new all-time high. Silver has risen by almost one-third in value in less than four weeks! I have been long for a while.
- Platinum is also making an explosive move higher to a more than 10-year high price above $1,900. I entered a long trade earlier this week.
- Gold is rising, but its advance is relatively very subdued.
- Palladium is rising, but weakly.
- US President Trump has announced a complete blockade of Venezuelan crude oil product exports, which is being enforced by the US navy. This has caused the price of WTI Crude Oil to rise from the 4-year low price which it reached yesterday in spot. The news may also be giving a tailwind to precious metals.
- A slew of important US economic data was released yesterday, showing mixed results that did little to change the outlook for Fed rate cuts in 2026:
- Average Hourly Earnings showed a weaker than expected increase = dovish case.
- Retail Sales showed no increase = dovish case
- Non-Farm Employment change was a bit higher than expected = hawkish case
- Core Retail Sales was considerably higher than expected = hawkish case
- UK CPI (inflation) data will be released today and is expected to tick lower from 3.6% to 3.5% on an annualised basis.
- In the Forex market, since today's Tokyo open, the strongest major currency has been the US Dollar, and the weakest has been the British Pound, which will put the GBP/USD currency pair in focus due to notably weaker than expected British inflation data. The USD/MXN currency pair is testing very long-term lows, having reached a new 17-month low just now. Many Forex brokers pay positive swap on short positions, which could make this an attractive carry trade on the short side. The USD/ZAR currency pair made a near 3-year low earlier today, and this can also be attractive to carry traders, although less so than USD/MXN as South Africa's interest rate is a bit lower.
- Bitcoin is showing price action which suggests indecision. Bears may need to break below $81,000 or even the round number below that at $80,000 to be more convinced of a stronger move down.