UK GDP data in focus
The surge higher in US consumer inflation certainly brought about some stirring reaction across the market, with bond yields notably surging higher as rate punters start to see a quicker timeline for the Fed to hike next year.
It's a big knock to Team Transitory's argument but then again, they're going to stick with their guns for as long as they can get away with it. So, don't expect much change to the narrative although they may have to act sooner rather than later regardless.
The dollar was a notable beneficiary with USD/JPY on approach to 114.00 again and EUR/USD breaching below 1.1500 to fresh lows this year. It is tough to pick at support levels for the latter now and it could be a slippery slope for the euro on the way down.
Elsewhere, gold also rose sharply as buyers sealed a technical breakout above the July to September highs this year and also above key trendline resistance from the August 2020 to May 2021 highs:
The $1,900 level is the next key target but this looks to be coming a little early before the seasonal tailwind kicks in for gold and I'd be wary of any real follow through conviction on the US CPI data yesterday especially.
The bond market still holds the key of course in terms of dictating trading sentiment but it is also tough to argue against the charts at times.
0700 GMT - UK Q3 preliminary GDP report
Prior release can be found here. The easing of virus restrictions helped to see a solid bump in Q2 activity but things are likely to slow down in Q3 amid less robust demand conditions and also with self-isolation restrictions weighing on business sentiment in August.
0700 GMT - UK September monthly GDP data
Prior release can be found here. An accompaniment to the quarterly estimate for Q3, so this isn't going to matter all too much.
Besides that, the European Commission will also be releasing their latest economic projections later today at around 1000 GMT so look out for that.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
