Key US CPI data released yesterday showed annualized inflation falling from 3.4% to 3.1%.
- UK CPI (inflation) data released earlier today shows an unchanged annualized rate of 4.0%, while a slight uptick to 4.1% was expected. This is a very slight dovish tilt, but was enough to send the Pound lower, with the GBP/USD currency pair trading as low as $1.12555, a weekly low price.
- Yesterday’s release of US CPI (inflation) data saw the annualized rate fall from of 3.4% to 3.1%. A stronger fall, to 2.9%, was expected, so the market got a hawkish surprise. As expected, this lower number saw US stock markets selloff, with the major equity indices the S&P 500 and the NASDAQ 100 and the Dow Jones 30 all experiencing sharp losses before making a partial recovery. The CME FedWatch tool shows market expectations of a rate cut in May have fallen even further after already declining over the past couple of weeks, with only 37% seeing -0.25% as likely.
- Despite the fall in US stock markets trend traders will still look to be involved on the long side, and day traders may consider trading these indices long if they show bullish momentum after the market opens.
- In the Forex market, the New Zealand Dollar has been the strongest major currency since the Tokyo open today. The US Dollar has been the weakest. The highest volatility recently has been seen in the USD/JPY currency pair, and in Yen crosses, although this is starting to decline. Despite the short-term fall by the US Dollar, it has some bullish momentum, with the Dollar Index DXY reaching a new 3-month high. The EUR/USD, USD/JPY, AUD/USD, and USD/CHF currency pairs have all seen the Dollar reach new 3-month highs.
- Japan’s top “currency diplomat” Kanda, responding to yesterday’s strong decline in the Japanese Yen against the US Dollar, has issued a public statement designed to shore up the Yen, seemingly with some initial success. He said that Yen moves are rapid, could have a negative effect upon the Japanese economy, and that he stood ready to respond at any time. Many analysts are pointing out that this Dollar strength can make it hard for the Bank of Japan to move away from its longstanding ultra-loose monetary policy which it has held for several years, as it plans to do later in 2024.
- Cocoa futures are making a bullish consolidation just under the recent multi-year high. Trend traders will remain interested in this commodity on the long side. It has been exhibiting a powerful bullish trend for well over one year. Cocoa futures are up by more than 25% since the start of 2024.
- Bitcoin is still testing the big round number at $50k. I think bulls will be wise to wait until a daily close above the big round number at $50,000 before entering any new long trade here.
- Yesterday’s release of Swiss CPI (inflation) data showed a monthly increase of only 0.2% when an increase of 0.6% was expected. This is a dovish surprise and has helped weaken the Swiss Franc over the past day.
- The Governor of the Bank of England will testify before the UK Parliament today.
- The Governor of the Reserve Bank of Australia will testify before the Australian Parliament today.
