It's not your straightforward week in markets despite all the anticipation on the US inflation and retail sales data this week. The dollar is keeping in a solid spot but not really pushing gains too much. Meanwhile, bond yields are tracking higher but that hasn't really provided much incentive for stocks to take a dive. Instead, dip buyers seem to be the ones winning out in Wall Street.
You would think that if markets are leaning towards the outlook vindicating a more hawkish Fed, the dollar would be soaring but instead the gains so far this week have been rather measured. In fact, market pricing for the terminal rate hasn't shifted much and is sticking around 5.20% to 5.25% roughly. That's somewhat similar to where we were before the big data releases over the past two days.
I want to say we're at a point where the market is sensing that a green light is coming to resume the January momentum - with regards to stocks and the dollar. However, rising bond yields definitely do complicate the picture a little. At worst, it just means we might get stuck into a bit of a choppy period in the coming weeks until broader markets get their story straight.
For now, the dollar is just slightly on the softer side today as risk sentiment holds up. There isn't anything in Europe to shift the narrative with US data once again in focus on the calendar.
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.