Waiting for inflation data from the US

The new week started with solid gains on American Indices despite a weak start in Asia and Europe. Dow Jones finished the day 2% higher, SP500 1.4%, and Nasdaq climbed 1.2%. This might be the end of a flat bearish correction we have been witnessing for the past couple of days and the start of a new bullish trend. As of the moment, it is hard to say whether this shall be the case, but let’s hope the uncertainty ends soon. This week’s calendar is so packed that it should give us all the answers in the mid-term and everything should be more or less clear on Friday.

Yesterday’s Macro calendar flashes green mostly with UK data where the GDP, industrial and manufacturing production finished better than expected and mostly higher than the previous month. Today’s calendar is also packed for the Pound. We already learned that the Claimant Count Change which was expected to be 3.5K, came almost 10 times higher at 30.5K! The first reaction on the Sterling was positive and the GBP will occupy us for a bit longer, as in a few hours we will hear an additional speech from BoE Governor Bailey.

The real gem in today’s macro calendar is the CPI data in the US. On a monthly basis, we are expecting a decline to 0.3% from the previous month’s 0.4%. On a yearly basis, analysts are expecting a drop to 7.3% from the previous 7.7%. Any bigger miss from the estimates can potentially rock the FX and stock market.

Ahead of this data, safe haven currencies like JPY, USD, and CHF are losing. On the other side of the spectrum, we have commodities currencies like AUD, NZD, and CAD who are gaining in value, unlike yesterday when AUD and NZD were among the weakest currencies. The situation remains constant for the JPY who has been trading lower for the past six days.

Monday finally proved beneficial for oil with the WTI climbing 3% higher and the positive sentiment continues today as the WTI climbs 1.4% higher. This bullish momentum cannot be observed in metals – yesterday, gold and silver lost around 1% and today, gold is starting the European session in a similar fashion to yesterday’s close. A notable rise happened yesterday in coffee who climbed 5.6% higher. This rise may be an indication of a new bullish wave after successfully establishing a bottom around 160 ¢/lb.