The US$ has eased back a little today, while stocks are higher (DJI/S+P + 0.8%/0.9%) after some slightly softer data, easing concerns over a high US CPI figure later in the coming session, but also driven higher by the energy sector which was underpinned by the US decision to exit the Iran nuclear deal. The US PPI rose by just 0.1% (exp 0.3%) in April after strong gains in the first quarter, held back by a moderation in the cost of services such healthcare, easing fears that inflation pressures maybe building up. The other big mover on the day was WTI which climbed above $71 per barrel after an unexpected drop in US stockpiles and as the market came to terms with President Donald Trump’s decision to withdraw from the Iran nuclear deal.
Thursday will be a busy session with Interest Rate Decisions to come from both the RBNZ, due shortly (RBNZ Unchanged. Kiwi lower on dovish inflation outlook), and from the BOE. No change is generally expected from either although some are still seeking a rate hike from the BOE, which would surprise the market and send Cable sharply higher. In the meantime, the focus is more likely to be centered of the Statement coming from each Central Bank, as well as the Minutes due from the BOE. Elsewhere, the China, April CPI will be closely watched (exp -0.1% mm, +2.4% yy) Europe will mostly be out for the Ascension Day holiday although the UK Manufacturing/Industrial Production will add to the volatility in Cable. The other big event of the session will be the US CPI (exp 0.3% mm, 2.5% yy; Core exp 0.2% mm, 1.9% yy), which will determine the direction of US yields and markets in general.
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