In large parts, the post-CPI moves were reversed in trading yesterday. That follows a rather disappointing US retail sales report here. The dollar was dealt a blow as bond yields tumbled but we're sort of at a crossroads now on the week.
For one, EUR/USD has already invalidated the Tuesday break lower as it holds above the December low of 1.0723. The pair is trading around 1.0760 now, just marginally lower on the day. Meanwhile, USD/JPY looked like it was going to invalidate its break above 150.00 but buyers now throwing in the towel just yet. The pair is now up 0.2% today to 150.20 currently.
At the same time, 10-year Treasury yields briefly dipped back into its previous range of 3.80% to 4.20% after the data yesterday. But it managed to claw its way back up with yields now seen up 2 bps to near 4.26% ahead of European trading.
Elsewhere, gold managed to squeeze out a slight advance to keep around $2,004 now. The precious metal is maintaining a slight bounce off its 100-day moving average, seen at $1,992 currently. As for stocks, the euphoria continues with another round of modest gains in trading yesterday.
Putting everything together, I would argue that there are some mixed signals going around. Stocks could well be in a world of their own but for FX and bonds, things are not too straightforward at the moment.
We will have US PPI and University of Michigan consumer sentiment to work with later today. Perhaps that might help traders to settle the score after the mixed reaction to the data so far this week.