- Market sentiment remains dicey amid cautious mood ahead of the key data.
- S&P 500 Futures struggle to track Wall Street’s gains at one-month high.
- US 10-year, two-year Treasury bond yields extend previous day’s losses.
- Expectations of softer US inflation keep optimists hopeful even as Fed policymakers defend rate hikes.
Bulls and bears jostle in the markets ahead of Thursday’s all-important US inflation data. Adding strength to the market’s indecision could be the recently mixed China Consumer Price Index (CPI) and Producer Price Index (PPI) figures for December, as well as a light calendar elsewhere.
While portraying the mood, S&P 500 Futures struggled for clear directions at the monthly high of 3,991, whereas the US 10-year Treasury yields dropped two basis points (bps) to 3.53% by the press time. It’s worth noting that the US two-year bond coupons also traced the 10-year counterpart and printed mild losses at around 4.21% at the latest.
That said, China’s headline CPI matched 1.8% YoY forecasts versus 1.6% prior, whereas the Producer Price Index (PPI) marked -0.7% figures compared to -1.3% previous readings and -0.1% market consensus.
Elsewhere, Federal Reserve Bank of Boston President Susan Collins backed the smaller rate increases while stating that she leans at this stage to a 25 bps hike. The policy, however, also mentioned that it is very data-dependent. Earlier in the week, Fed Chair Jerome Powell hesitated in conveying monetary policy outlook and raised hopes of a policy pivot.
On a different page, China’s total reopening and early signals of heavy holiday shopping join the chatters that the People’s Bank of China (PBOC) will adhere to rate cuts in 2023 to spread the Beijing-inspired optimism.
Amid these plays, the US Dollar Index (DXY) remains pressured around 103.10, down 0.13% intraday, whereas WTI crude oil remains indecisive around $77.70 after rising the most in two months the previous day.
Market players may witness lackluster moves ahead of the US inflation data. However, expectations of a softer outcome and recently mixed comments from the Fed policymakers raise fears of a wild move in case the actual outcome disappoints.
Also read: US December CPI Preview: EUR/USD and USD/JPY are pairs to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD keeps the bullish outlook above 0.6600
A negative session in the Greenback allowed AUD/USD to leave behind two consecutive sessions of losses and reclaim the area beyond the key barrier at 0.6600 the figure on Thursday.
EUR/USD: Next target emerges at 1.0800
In line with the broad improvement in the risk appetite, EUR/USD reversed part of the recent weakness and advanced to the vicinity of the 1.0800 region in response to the renewed selling pressure hurting the Dollar.
Gold poised to resume its advance
XAU/USD now gathers fresh steam and advances to the highest level in many sessions north of the $2,330 mark per troy ounce on the back of further selling pressure hurting the Greenback as well as mixed US yields.
Bitcoin price is down over 20% from its peak, but BTC macro uptrend remains very much intact
Bitcoin (BTC) price peaked at $73,777 in March, marking a new all-time high recorded over a month before the fourth halving. The bold move north has however been followed by a cascade of load-shedding exercises, though not enough to invalidate the big-picture bullish outlook for BTC.
Bank of England update: A mixed bag
As widely expected, the Bank of England (BoE) held the Bank Rate on hold at 5.25% for a sixth consecutive meeting, its highest level since 2008. However, what was key today was the central bank signalled it could be getting closer to easing policy in the summer, possibly as early as June’s meeting or in August, which is fully priced in at the moment.