Good morning, traders. It’s Wednesday, and markets are reacting to a second wave of inflation data after a busy Tuesday.
Yesterday’s headline was U.S. CPI, which delivered a mixed but ultimately dollar-positive print.
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Core CPI came in below expectations.
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But the headline number surprised to the upside at 2.7% vs. 2.6% expected, giving the U.S. dollar a boost across the board.
Canada’s CPI also leaned hot, with median inflation beating forecasts, which added fuel to the Canadian dollar’s gains.
Today, the focus stays on inflation with U.S. PPI (producer prices) on deck — expected at 0.2%.
We also just had UK CPI, which surprised to the upside at 3.6% vs. 3.4% expected. The initial market reaction was bullish for the British pound.
Currency markets are showing some shifts this morning:
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USD and CAD are pulling back slightly after yesterday’s strength, though sentiment remains broadly supportive.
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GBP is gaining after the inflation print.
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AUD is also showing strength.
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Meanwhile, the Japanese yen is under pressure, undergoing a bearish correction.
On the commodity front, it’s a mixed picture:
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Oil continues to drift sideways, trapped in a rectangle pattern, searching for a breakout.
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Silver saw a sharp correction.
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Gold is under pressure but trying to recover early in the session.
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Copper is also trading lower. Overall, sentiment in the metals space is weak this week, despite minor Wednesday morning rebounds.
In equities, price action is flattening out:
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S&P 500 is edging lower and currently testing a key dynamic support zone.
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NASDAQ is also pulling back after touching new all-time highs on Tuesday.
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In Europe, DAX is starting the day sharply lower, leading the regional weakness as the session opens.
Wednesday brings a bit of indecision across markets, but inflation remains the theme — and traders are watching closely for signs of either confirmation or contradiction from today’s PPI data.