Hello traders, and happy inflation day to those who celebrate! Today will be one of the key trading sessions of the week as we are set to receive CPI data from the US. Consumer inflation is expected to rise to 2.9% from 2.7% previously, and this number will likely be the main driver across currencies, indices, and commodities.
But that’s not all. For the euro, the spotlight will be on the ECB interest rate decision. Rates are expected to remain unchanged at 2.15%, but the policy statement and press conference could add volatility. Put together, today promises to be crucial for EUR/USD, as it will be hit by both CPI and the ECB in one session.
Looking back at yesterday, we got another disappointment from the US PPI, which came in at –0.1%. Interestingly, 6 out of the last 7 readings have missed expectations. The first market reaction was a weaker dollar, but that didn’t last long. The greenback shrugged off its initial weakness and is now one of the strongest currencies heading into the CPI release.
On the equity side, indices are trying to rebound after weakness in the second half of yesterday’s session. Futures are flashing green this morning, with buyers defending key supports. On the commodities front, oil broke out of consolidation yesterday, followed by a correction that now seems to be ending. A similar story is playing out in gold and silver, both of which are pushing higher at the start of the European session, building strong hourly candles.
Finally, one notable move this morning comes from the yen, which is under pressure. Pairs with JPY are climbing significantly higher, showing that traders are leaning risk-on as the European session approaches.
All in all, Thursday morning sets the stage for a very volatile session ahead. Buckle up.