CPI in focus as markets attempt a broad recovery

Frank Walbaum

Important news this week

Tue, 10th, 14:30 CET US Consumer Price Index (Core).

Thu, 12th, 08:00 CET UK Gross Domestic Product.

Fri, 13th, 14:30 CET US Producer Price Index.

CPI in focus as markets attempt a broad recovery

US inflation takes centre stage today, with investors looking for signs of whether price pressures are accelerating again. A stronger CPI reading could complicate the Federal Reserve's outlook and potentially reduce the chances of a rate cut in December. That would put pressure on equities and risk sentiment, particularly if Treasury yields and the US dollar react higher. For now, however, the dollar remains weak, providing some support to risk assets as markets attempt to recover from last week's losses.

Market talk

Most major markets are turning higher after last week's selling pressure. The weaker US dollar is helping equities and precious metals recover, although today's inflation data could quickly change the direction. The key question is whether this rebound marks a genuine improvement in sentiment or simply a technical recovery ahead of another important macroeconomic test.

Nvidia started the session under pressure but managed to stabilise somewhat during yesterday's trading. The broader technology sector remains sensitive to concerns about AI valuations, investment spending and future earnings expectations. Any renewed rise in bond yields following stronger inflation data could create another challenge for high-growth stocks.

Gold is approaching an important technical resistance area around its 50-day moving average on the daily chart. A decisive break above this level could strengthen the recovery, while another rejection may encourage profit-taking. Silver continues to lag behind gold, suggesting that demand for precious metals remains selective rather than broad-based.

Oil is turning sharply lower. Reduced geopolitical tensions are taking some of the risk premium out of energy prices, while concerns about the demand outlook may also be weighing on the market. Lower oil prices could ease inflation expectations and provide some support for consumers and equity markets, although the move may also reflect caution about global growth.

Cryptocurrencies remain the notable exception to the broader recovery. While equities and metals are gaining ground, digital assets are struggling to build momentum. Bitcoin and other major tokens are either moving sideways or continuing to turn lower, indicating that risk appetite in the crypto market remains particularly fragile.
Today's CPI release is therefore crucial. A softer reading could reinforce expectations of further monetary easing and support the current recovery across markets. A stronger number, however, could revive concerns about persistent inflation and force investors to reconsider how much room the Fed has to cut rates in December.

Tendencies in the markets

Equities positive, USD weak, crypto weak, oil weak, metals sideways, JPY mixed.

Markets in focus

SP500-s (focus for the day: s=short / l=long).

Author

Frank Walbaum

AUD/USD stays weak above 0.6900 after China’s trade data

AUD/USD struggles to capitalize on the previous day’s recovery and stays defensive on the 0.6900 level following the narrowing of trade surplus in China. Increased December Fed rate hike bets allows the US Dollar to pause its decline and weigh on the pair. US CPI data is next of note for the major.

USD/JPY retakes 158.00 on weak Japanese data; focus shifts to US CPI

USD/JPY attracts some dip-buyers and retakes 158.00 in the Asian session on Tuesday as a fall in Japan’s Household Spending offsets hawkish BoJ Summary of Opinions, undermining the Japanese Yen. Moreover, Fed hike bets support the safe-haven US Dollar and the currency pair. The market focus now shifts to the release of the crucial US CPI report.

Gold sticks to modest losses amid Fed hike bets; holds above $4,100 ahead of US CPI

Gold meets fresh supply, eroding a part of the previous day's strong gains to the $4,150 resistance zone, albeit it holds above the $4,100 mark heading into the European session. Firming US Federal Reserve rate-hike expectations turn out to be a key factor driving flows away from the non-yielding bullion. Meanwhile, the US Dollar struggles to lure buyers amid mixed signals regarding the state of diplomatic talks between the US and Iran, offering some support to the commodity as traders seem hesitant ahead of US consumer inflation figures.

Bitcoin hits lowest weekly close since August as short-term holders slip into losses

Bitcoin fell below $75,000 on Tuesday, after recording its lowest weekly close since August as selling pressure pushed recent buyers into losses.

This weeks’ two big inflation reports will offer perspective

Payrolls on Friday surprised with a big gain, 165,000 new jobs rather than the 65,000 forecast. Also the unemployment rate fell from 4.2% to 4.1% although average hourly earnings are up only 0.4% ($32.75). This weeks’ two big inflation reports will offer perspective. Tomorrow it’s CPI and on Friday, which is a Friday the 13th, it’s PPI.

Gold reclaimed $4,100. Tuesday’s CPI test decides if it holds

Gold (XAU/USD) starts the week on a positive note, reclaiming the $4,100 psychological level as the US Dollar (USD) retreats from its recent highs. The precious metal recovers from Friday's losses, although investors remain cautious ahead of Tuesday's US Consumer Price Index (CPI) report, which could determine the next direction for Bullion.