- Inflation in the US remains a concern for global markets and yesterday’s Producer Price data came in hotter than expected, however all eyes will be on today’s Consumer Prices report. After the PPI release, we had several Fed speakers on the wires, including Chairman Powell who highlighted the strength of the economy and recent lack of progress on inflation. However, he did reiterate recent comments where he pushed back on interest rate hikes underlying the ongoing ‘higher for longer’ theme. His messaged was echoed by Kansas Fed President Jeffrey Schmid who said rates could remain high for “some time” as FOMC rate setters await evidence that price pressures are easing. This afternoon’s CPI release at 1.30pm UK time will be the main event of the day, with markets looking for a small deceleration from March. Headline CPI is expected to hold steady at 0.4%, with the year-on-year change nudging down a tad from 3.5% to 3.4%. Sticky inflation remains considerably above the Fed’s target rate and this afternoon’s data could have a significant impact on the timing of the first interest rate cut of the cycle.
- The single currency is holding up well against the greenback, with EURUSD currently trading above 1.08 as we await this afternoon’s US data and the eurozone GDP report for Q1 this morning. We also wait the release of March Industrial Production data along side with GDP report, which coupled with ongoing CPI releases will help markets to decide if the ECB remains on course for a June interest rate cut.
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