The AUD is the strongest and the GBP is the weakest as the NA session begins. The USD is mixed to weaker ahead of CPI data which will be released at 8:30 AM ET. The headline inflation is expected to rise by 0.2% versus 0.4% last month. The YoY is expected to fall to 5.2% from 6.0%. A year ago the CPI rose by 1.2% for the month. The decline in the year on year is largely due to the dropping out of that large number from the calculations.
The next four months will have 1.2%, 0.3%, 1.0%, and 1.3% fall out of the year on your equation. Adding those four numbers totals 3.8%. Assuming month-to-month data is much less than those numbers now, the calculation will have the headline CPI move sharply lower. How low it gets is the main story.
The core CPI is expected to rise by 0.4% versus 0.5% last month, while the YoY is expected to rise to 5.6% from 5.5%. Focus will be on the price of shelter. Last month shelter rose by 0.8% which continued the solid pace to the upside. Much has been said about how shelter costs are expected to decline due to the way that it is phased out over time on a delayed basis. Indications are there has been a slowing of shelter costs, but so far they have not shown up. As each month goes by those expectation from traders become more and more intense. Shelter costs account for one third of the CPI inflation.
Also on the calendar today, is the Bank of Canada interest rate decision. The central bank suspected to keep rates unchanged at 4.5%. It would be the second consecutive month of no change in policy since pausing in after the January hike. The USDCAD has seen some weakness ahead of the announcement today ahead of the release. The USDCAD, however, has moved lower from a Monday high of 1.3553. The current price trades at 1.3479 and tests its 200 are moving average 1.3481 (green line in the chart below) just above that level is the 100 hour moving average 1.3492. Moving above both those moving averages would tilt the bias more to the upside.
Later today the Fed will release the minutes from the last central bank meeting where the Fed increase rates by 25 basis points. If it weren't for the banking crisis from Silicon Valley Bank, the Fed may have hiked by 50 basis points instead. Comes from Fed officials will be scrutinized for clues as to future policy.
The U.S. Treasury will auction off 10 year notes at 1 PM ET. The three year note auction yesterday came in near WI levels just prior to the auction.
A snapshot of the markets currently shows:
- Spot gold is back above $2000 at $2007.98. That is up five dollars or 0.24% on the day.
- Spot silver is up five cents or 0.21% or $25.12
- WTI crude oil is near unchanged of the $81.51
- The price of bitcoin remains above $30,000 at $30,032. The high price yesterday was a new cycle high at $30,575 which is the highest level since June 2022.
In the premarket for US stocks, the major indices are trading higher:
- Dow Industrial Average Ridge is up 69.21 points after yesterday's 98.27 point rise
- S&P index is up 6.5 points after yesterday's -0.17 point decline
- NASDAQ index is up 15.5 points after yesterday's -52.48 point decline
in the European equity markets, the major indices are higher a day after Frances CAC closed at a new record high:
- German DAX +0.19%
- Frances CAC +0.34%
- UK's FTSE 100 +0.60%
- Spain's Ibex +0.4%
- Italy's FTSE may be +0.55%
in the Asian/Pacific markets:
- Japan's Nikkei rose 0.57%
- Hong Kong's Hang Seng index fell -0.86%
- Australia's S&P/ASX index rose 0.47%
- China's Shanghai composite index rose 0.41 percent
in the US a debt market, yields are mixed/modestly changed:
- two year yield 4.053% -0.4 basis points
- five year yield 3.555% +0.7 basis points
- 10 year yield 3.452% +1.9 basis points
- 30 year yield 3.647% +2.6 basis points
the European debt market, the benchmark 10 year yields are mostly modestly lower:
