It is one of those days where there traders and investors will lack any real conviction as all eyes are on the US CPI data tomorrow. That will set the tone for broader market sentiment for the rest of the week and likely the rest of February as well.
Despite the estimates siding with yet another softer report, I think the squeeze potential for either side of the trade is rather strong at the moment. After seeing the pushing and pulling in the past week or so, it seems like markets are feeling rather angsty and if the data vindicates their outlook, they will squeeze those betting on a hawkish Fed hard. On the flip side, if the data comes in strong, the pain will be felt equally as much - if not more - on the other side.
After the technical setback last week, one spot I'd be watching is gold as there might be the potential for a significant correction lower if the inflation numbers come in hot - via a stronger dollar and rates.
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