A round of high-impact data releases begins today with US CPI data, with stocks rising in anticipation of a strong fall and a rate hike pause tomorrow.
- There will be a release of US CPI (inflation) data today which will be keenly watched. The annualized rate is expected to fall from 4.9% to 4.1%, finally opening a meaningful positive real interest rate in the USA if the fall will be in line with expectations. The Federal Reserve will be meeting tomorrow and is expected to not hike rates for the first time in about one year.
- Global stock markets are bullish, partly in expectation of lower US inflation and no rate hike tomorrow. The US and Japanese stock markets have risen strongly to reach new long-term highs, represented especially by the NASDAQ 100 Index and the Nikkei 225 Index, with both gaining by more than 1.5% on the day.
- The People’s Bank of China made a surprise rate cut in its 7-day reverse repo rate from 2.0% to 1.9% which has probably helped contribute to the generally bullish mood in stock markets.
- The big 3 central banks – the US Fed, the ECB, and the BoJ – will be having policy meetings this week, so we can expect volatility in the Forex market starting later today.
- In the Forex market, the US Dollar is falling again. Over the Asian session, the Euro has been the strongest currency, and the US Dollar the weakest. Trend traders will probably still be looking for long trades in the USD/JPY currency pair which recently reached a new 6-month high price.
- The Turkish Lira fell to another record low yesterday, after undergoing a fresh weakening ever since President Erdogan’s election victory started to look likely.
- There will be a release later today of UK claimant count change data (unemployment claims).