Inflation is peaking?

Inflation is for sure one of our biggest concerns this year but most recently, we have signs that it may be peaking and the actions taken by central banks may be finally showing some effects. Overnight, we found out the CPI data from Australia, which came at 6.9%, which was lower than the expectations (7.6%) and the number from the previous month (7.3%). Wort noticed that yesterday we got the CPI data from Spain, which did the same: come below 7% and was lower than expectations and the reading from the previous month.

Today, we will receive more inflation data from Europe, which can confirm the start of a new trend. The euro stays under selling pressure on most of the pairs. EURUSD is currently on the green side of the market but is still being influenced by the sharp reversal from Monday, which can still result in a bigger drop further down the road.

Interestingly, despite lower inflation in Australia, AUD remains strong. It can be even more confusing if you notice that we also received soft PMI data from China, the largest Australian trading partner. Those numbers in theory should negatively affect the AUD but it is currently not happening.

The calendar today is packed. Apart from the inflation data from Europe, we will also get the GDP and ADP numbers from the US. The European session will end with the JOLTS Job Openings and the American one will end with a speech from Jerome Powell. No boredom today, I guess.

Indices remain flat after the non-eventful session yesterday. Long-term sentiment remains strongly bullish and a lot of work would have to be done to change that. Commodities also do not move much on Wednesday morning. Oil is currently taking a break after the rally yesterday, which was able to deny the mid-term buy signal. The V-shape reversal that we can see on the chart of Oil is currently promoting a short-term rise in prices.