Senior Relationship Manager
Summary: Waiting for the CPI, EURUSD at a key level
Good Morning all,
Markets are a bit quiet – if not actually a bit dull ahead of the US CPI this afternoon at 14:30 CET.
While US Equitiy closed at records again, movements were fairly small considering that the 1 trillion infrastructure deal made it through the senate and the process on the 3.5 trillion budget has started. US Indexes closed 0.1-0.5% higher, Europe also gained and over night we saw minute retracements. Gold and silver traded lower yesterday but recovered to 1734 and 23.40, EURUSD is at 1.1715 and GBPUSD at 1.3826. The USD Index rose above 93.10 and Bitcoin 46,000.
EURUSD is right at a key support level here and a break lower would suggest a move to 1.1620.
The big question is if the CPI today calls for fed action in terms of either tapering or a shift to a rate hike earlier or if the argument the high inflation was only transitory can be maintained. In recent economic data releases, FX has been more sensitive to rates while equities are more driven by QE and money flow. Watch out for comments after the data we well as for the data itself.
The Core CPI YY is expected at 4.3%, the CPI MM SA at 0.5%, the CPI YY NSA at 5.3%.
The German CPI was released as expected
Safe trading
Local Start Date | Local Time | Country/Region | Indicator Name | Period | Reuters Poll |
11 Aug 2021 | 10:00 | Italy | CPI (EU Norm) Final MM | Jul | -1.1% |
11 Aug 2021 | 10:00 | Italy | CPI (EU Norm) Final YY | Jul | 0.9% |
11 Aug 2021 | 14:00 | Brazil | Retail Sales YY | Jun | 9.00% |
11 Aug 2021 | 14:30 | United States | CPI MM, SA | Jul | 0.5% |
12 Aug 2021 | 01:50 | Japan | Corp Goods Price MM | Jul | 0.5% |
12 Aug 2021 | 01:50 | Japan | Corp Goods Price YY | Jul | 5.0% |
12 Aug 2021 | 08:00 | United Kingdom | GDP Est 3M/3M | Jun | 4.8% |
12 Aug 2021 | 08:00 | United Kingdom | GDP Estimate MM | Jun | 0.7% |
12 Aug 2021 | 08:00 | United Kingdom | GDP Estimate YY | Jun | 15.0% |
12 Aug 2021 | 08:00 | United Kingdom | Manufacturing Output MM | Jun | 0.4% |
12 Aug 2021 | 08:00 | United Kingdom | GDP Prelim QQ | Q2 | 4.8% |
12 Aug 2021 | 08:00 | United Kingdom | GDP Prelim YY | Q2 | 22.1% |
12 Aug 2021 | 13:00 | Turkey | CBT Weekly Repo Rate | Aug | 19.00% |
12 Aug 2021 | 13:00 | Turkey | O/N Lending Rate | Aug | |
12 Aug 2021 | 13:00 | Turkey | O/N Borrowing Rate | Aug | |
12 Aug 2021 | 13:00 | Turkey | Late Liquidity Window Rate | Aug | |
12 Aug 2021 | 14:30 | United States | Initial Jobless Clm | 7 Aug, w/e | 373k |
13 Aug 2021 | 08:45 | France | CPI (EU Norm) Final MM | Jul | 0.1% |
13 Aug 2021 | 08:45 | France | CPI (EU Norm) Final YY | Jul | 1.6% |
13 Aug 2021 | 09:00 | Turkey | Current Account Balance | Jun | |
13 Aug 2021 | 09:30 | Sweden | CPI MM | Jul | 0.3% |
13 Aug 2021 | 09:30 | Sweden | CPI YY | Jul | 1.4% |
13 Aug 2021 | 16:00 | United States | U Mich Sentiment Prelim | Aug | 81.2 |
16 Aug 2021 | 01:50 | Japan | GDP QQ | Q2 | 0.2% |
16 Aug 2021 | 01:50 | Japan | GDP QQ Annualised | Q2 | 0.7% |
16 Aug 2021 | 01:50 | Japan | GDP QQ Pvt Consmp Prelim | Q2 | -0.1% |
16 Aug 2021 | 01:50 | Japan | GDP QQ Capital Expend. | Q2 | 1.7% |
16 Aug 2021 | 01:50 | Japan | GDP QQ External Demand | Q2 | -0.1% |
16 Aug 2021 | 04:00 | China (Mainland) | Urban Investment (YTD)YY | Jul | |
16 Aug 2021 | 04:00 | China (Mainland) | Industrial Output YY | Jul | |
16 Aug 2021 | 04:00 | China (Mainland) | Retail Sales YY | Jul | |
16 Aug 2021 | 12:00 | Euro Zone | Reserve Assets Total | Jul |
(refinitv)
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.