Hello traders, and welcome to what could be the most important day of the week.
Tuesday’s calendar has one headline event dominating the agenda – U.S. inflation. The yearly CPI is expected to rise to 2.8%, while the monthly figure is forecast at 0.2%. With such a pivotal number on the horizon, market activity is understandably cautious. For now, traders appear to be positioning themselves for the release, with muted moves across major markets.
We did get some action earlier, though. The Reserve Bank of Australia delivered the widely anticipated 25 basis point rate cut, taking the benchmark rate down to 3.6% from 3.85%. The initial reaction was a swift drop in the Australian dollar, fueled further by a dovish policy statement and press conference. As the European session opens, the Aussie remains one of the weakest currencies on the board.
From the UK, we saw a mixed bag – average earnings index came in softer than expected, while the claimant count change was a pleasant surprise. The pound reacted with a quick uptick before settling, as traders digested the contrasting signals. On the currency leaderboard, Swiss franc and Canadian dollar are showing the most strength, while the Japanese yen is also struggling alongside the Aussie.
Indices are stuck in waiting mode. Both U.S. and European benchmarks are moving sideways, clearly reluctant to make big bets before the CPI print. It’s a similar story in commodities – oil prices are ticking slightly higher, but metals remain under pressure after yesterday’s weak start to the week, with gold and silver still on the back foot.
All eyes are now locked on the U.S. inflation numbers. The reaction could define not just the day but potentially set the tone for the rest of the week. Buckle up – the quiet won’t last long.