The dollar ran hot and equities were battered yesterday in the aftermath of the US CPI data, which was hotter-than-expected. The moves are kept slightly in check today with S&P 500 futures recovering by 0.2% after having seen the cash market fall by over 4% yesterday. Meanwhile, the dollar is a touch lower with EUR/USD keeping close to parity and USD/JPY down just below 144.00 amid some jawboning by Japanese authorities on the day.
We are pretty much reverting back to levels seen in early September as the focus and attention turns towards the Fed next week. Will there be a possibility of a 100 bps rate hike? Only time will tell. But for now, markets are certainly not ruling out those odds whatsoever.
Looking ahead today, we should see the appetite in markets to settle after the big moves yesterday. The dollar will be looking to contest key technical levels once again as it did at the start of the month while equities will have to keep a look out for the lows last week in case more bearish elements start to creep in before the Fed next week.
In terms of data, UK inflation will be a focus but we should continue to see the annual reading hold above 10% and keep the pressure on the BOE to raise the bank rate by 50 bps next week.
0600 GMT - UK August CPI figures
0900 GMT - Eurozone July industrial production
1100 GMT - US MBA mortgage applications w.e. 9 September
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.
