Today brings a significantly more active calendar, with some key data already in and more expected later in the day. This morning, we received the Claimant Count Change from the UK, which came in below expectations, showing a better-than-anticipated labor market situation. Additionally, the Average Earnings Index surprised to the upside, coming in at 5.5%, reinforcing the strength of wage growth in Britain.
Despite these strong figures, the British pound is reacting with restraint, showing only modest movements so far. Traders may be holding back in anticipation of larger global events or awaiting further confirmation from inflation trends.
The main macro event today is the U.S. inflation report, due later in the day. Markets are bracing for this release, with CPI expected to remain at 2.4% year-over-year, while Core CPI is forecast at 0.3% month-over-month. This release is likely to set the tone for risk assets, currencies, and especially interest rate expectations in the coming sessions.
From a fundamental perspective, we are still digesting the weekend news about a new trade deal between the U.S. and China. Interestingly, market consensus is viewing the deal as a strategic win for China, while the U.S. administration's efforts to frame it positively have been met with skepticism. Still, the announcement has eased global tensions and supported a risk-on mood.
The earnings calendar today is relatively quiet, with no major companies reporting. Traders are instead focused on macro drivers and broader sentiment shifts.
On the indices front, equity markets remain positive. After a strong start to the week on Monday, European indices are opening Tuesday’s session higher again, following gains in Asia and supported by strong momentum in U.S. futures.
Turning to the currency market, we see strength in safe haven currencies like the Swiss franc and Japanese yen, but also in risk-sensitive currencies such as the Australian and New Zealand dollars. The American dollar is slightly weaker heading into the CPI release, as traders position cautiously.
On the commodities side, oil is seeing a small correction after recent gains, but overall remains in a positive trend for the past 10 days. Meanwhile, precious and industrial metals are climbing—gold, silver, platinum, copper, and palladium are all showing solid gains this morning, as inflation concerns and the slightly weaker dollar provide support.
In summary, we’re starting the day in a generally optimistic mood, but all eyes will be on the U.S. inflation report, which is likely to bring a sharp increase in volatility. Traders should be prepared for rapid price swings around the time of the release.