Investors are bracing for the US CPI numbers, due later in the day. Inflation, measured by consumer prices, is expected to tick lower to 5.3% year-on-year, from 5.4% previously, while the monthly change should decelerate to 0.5% from 0.9% previously. The yearly change is way above the Fed's 2% target and shows no transitory symptoms.
Additionally, the core inflation is seen slowing to 4.3% from 4.5% yearly, while the month-on-month indicator is forecast to decline to 0.4%. Elevated inflation numbers should pressure the Fed to start tapering sooner rather than later, possibly supporting the US dollar.
On the other hand, the Chicago Fed President Charles Evans took a dovish stance on Tuesday, saying the current inflation spike shouldn't push the Federal Reserve to tighten monetary policy prematurely.
From other news, oil reversed sharply and formed what appears to be a double bottom pattern now. That is a bullish formation, and the support of this pattern is at 65.30 USD. As long as oil trades above it, the short-term outlook seems bullish, again targeting the 70 USD level.
Stock markets have not moved anywhere, and equities consolidated yesterday, with today's CPI data most likely causing some volatility.