US Consumer Price Index data released yesterday came in at an annualized rate of 3.2%, compared to the expected 3.3%. This created more dovish expectations from the Fed and sent stocks and risk assets higher and sent the US dollar sharply lower.
➡️ Crucial US CPI inflation data was released yesterday, showing that inflation fell more sharply than expected, from an annualized rate of 3.7% to just 3.2%, when 3.3% was the forecast consent. The data has created expectations that the Fed has reached its terminal rate at 5.50% and that the tightening cycle is now over, with rate cuts of 0.50% now expected by July 2024. This sent US Treasury yields falling sharply, while the US dollar had its worst day of the year, reaching a new 2-month low. Stocks and other risky assets were pushed sharply higher, especially in the United States, where the NASDAQ 100 index it is trading at the new high price of the last 3 months. This inflation data could mark an important turning point in the markets producing a much stronger and more sustained risk appetite.
➡️ In the Forex market, the New Zealand dollar was the strongest major currency since Tokyo opened today, while the Japanese yen was the weakest major currency. The USD/JPY currency pair is still technically within a long-term uptrend and some trend traders will keep it on the Long side, as despite yesterday's sharp drop, it has yet to move back by an excessive amount since making a new High price from a year earlier this week.
➡️ Stock markets look bullish and the best daily trades are likely to be on the Long side of some of the major stock indexes, with the NASDAQ 100 Index looking particularly attractive.
➡️ Most commodities are gaining ground, with cocoa futures which stood out after reaching a new multi-year high yesterday before closing lower.
➡️ Australian Wage Price Index data has arrived as expected.
➡️ Chinese industrial production data was slightly higher than expected.
➡️ UK Consumer Price Index (inflation) data will be released today, which is expected to show a sharp decline in inflation, from an annualized rate of 6.7% to 4.7%.
➡️ There will be a subsequent release of Australian unemployment rate data.
➡️ Today 3 high-impact US data will be released:
- Index PPI
- Retail sales
- Empire State Manufacturing
Credit by DailyForex.com