Daily thread to exchange ideas and to share your thoughts
The hotter-than-expected US CPI data yesterday is certainly giving the market some food for thought as the inflation debate continues to play out. Rate punters are expecting the Fed to now act in July instead of September before the report, with bond yields and breakevens surging strongly while real yields tumbled to fresh record lows.
But did the report really tell us anything new as a whole? I'm not too convinced.
The numbers are definitely jarring but Fed's Daly was quick to address that and the central bank's stance yesterday here. I'd expect more Fed policymakers to rebuff that view.
The dollar soared on the report and sometimes though, it is hard to argue with the charts.
EUR/USD broke to fresh lows for the year, now keeping below 1.1500 at around 1.1480. There is little in the way of an extended push lower from here, so just be wary of that.
Cable also dipped to its lowest since December last year but is keeping above 1.3400 for now, though buyers can't really breathe a sigh of relief just yet.
Meanwhile, USD/CAD is testing waters above 1.2500 with buyers taking aim at the 100-day moving average @ 1.2536 so that is a pivotal level to watch.
Elsewhere, gold also breached key technical resistance above $1,830-34 as buyers look set for a potential breakout towards $1,900. I'm not all too convinced though for gold especially when the break comes the way it did, going back to the inflation debate that is.
I'm one to advocate a technical push higher alongside the December to January seasonal tailwind but this is one that is coming a bit early, so we'll see how things play out in the bond market to have a better sense of things in the weeks ahead.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
