Headlines:
- The pressure is on for the dollar with CPI in focus
- Bond yields feeling heavy ahead of key US data later
- ECB's Müller: A June rate cut is very probable
- ECB's Rehn: Rates can be cut if confidence on inflation progress continues to strengthen
- France April final CPI +2.2% vs +2.2% y/y prelim
- Eurozone Q1 GDP second estimate +0.3% vs +0.3% q/q prelim
- Eurozone March industrial production +0.6% vs +0.5% m/m expected
- US MBA mortgage applications w.e. 10 May +0.5% vs +2.6% prior
Markets:
- JPY leads, USD lags on the day
- European equities slightly higher; S&P 500 futures flat
- US 10-year yields down 3.1 bps to 4.413%
- Gold up 0.2% to $2,363.02
- WTI crude down 0.7% to $77.50
- Bitcoin up 1.3% to $62,445
It was a quieter session as markets are prepping for the US CPI showdown later in the day. Alongside that release, we will also get US retail sales so it is going to be a blockbuster event on the data front in US trading.
For now though, the dollar is taking on a more defensive positioning with yields also trending lower. As 10-year yields are down by over 3 bps to 4.413%, that is dragging the greenback lower across the board as well.
USD/JPY in particular fell off from 156.20 to 155.60 and is holding thereabouts now, down 0.5% on the day. European currencies are just mildly higher against the dollar but the antipodeans are keeping gains since Asia trading. AUD/USD is up 0.2% to 0.6640 and NZD/USD up 0.4% to 0.6060 currently.
In the equities space, European indices are keeping the optimism even as US futures are feeling rather muted. That's a sign risk trades are not perking up just yet, but we'll see what the main event later will bring.
We're about 30 minutes away now. Strap yourselves in. It's going to be an action-packed one in the session ahead.
