Indices Rebound After Inflation Whipsaw, Eyes on U.S. PPI

Hello traders, and welcome to Thursday. Markets are still reacting to Wednesday’s U.S. inflation report, which came in higher than expected at 0.5% month-over-month (vs. 0.3% expected) and 3% year-over-year (vs. 2.9% expected). As expected, the data triggered high volatility, with the dollar strengthening initially before reversing lower. Indices also saw a sharp drop, followed by a strong rebound, creating a whipsaw effect across markets.

Today’s economic calendar features key data releases, including UK GDP, which was published before the European session opened, as well as Swiss inflation early in the day. Later, traders will turn their attention to U.S. Producer Price Index (PPI), which could provide further insight into inflation trends and influence market sentiment.

Beyond economic data, markets are also digesting Donald Trump’s proposed peace plan for the war in Ukraine, which has sparked discussions but has yet to generate a clear market reaction. The geopolitical landscape remains an important factor influencing sentiment, particularly in European assets.

On the currency market, we see weakness in the Japanese yen and the U.S. dollar, while European currencies continue to show strength. This trend isn’t limited to the euro and British pound but extends to emerging market currencies such as the Hungarian forint, Polish zloty, and Czech koruna. The Australian and New Zealand dollars are also performing well, benefiting from improved risk appetite.

In commodities, oil has given back all of its recent short-term gains and is now trading near mid-term lows, with increased selling pressure suggesting a potential breakout lower. Meanwhile, in the metals market, gold and silver saw a sharp drop followed by a V-shaped recovery, clearing some stop-loss levels before rallying higher.

On the earnings front, today’s calendar is quiet, with no major companies set to report. The most notable earnings release from Wednesday was Cisco, which beat expectations after the market closed. The stock is expected to open around 7% higher today, providing a boost to the tech sector.

With markets still adjusting to inflation data, geopolitical developments, and commodity price shifts, today’s session is likely to remain active, especially as traders prepare for the next wave of U.S. data.

Source: https://www.axiory.com/analytics/market-news/indices-rebound-after-inflation-whipsaw-eyes-on-u