US CPI preview:
- What is the distribution of forecasts for the US CPI?
- US January CPI report to offer a cleaner read on inflation developments?
Headlines:
- US futures drop lower as equities look to end the week with a whimper
- Gold at risk of another selloff as traders turn their focus to the US CPI report
- How have interest rate expectations changed after this week’s events?
- Oil prices dip on report that OPEC+ may resume oil output hikes from April
- EU trade surplus shrinks further in 2025 as US exports tumble while Chinese imports surged
- China holds roundtable meeting with big German companies in Beijing
- Trump reportedly weighs up plans to scale back on steel and aluminium tariffs
- US Treasury secretary Bessent says that metals tariffs decision will be up to Trump
- ECB policymaker Kazāks: Now is not the time to move interest rates
- Switzerland January CPI +0.1% vs +0.1% y/y expected
- Spain January final CPI +2.3% vs +2.4% y/y prelim
- Eurozone Q4 GDP second estimate +0.3% vs +0.3% q/q prelim
- China January M2 money supply +9.0% vs +8.4% y/y expected
Markets:
- Dollar slightly firmer; USD/JPY up 0.4% to 153.30, AUD/USD down 0.5% to 0.7055
- European indices slightly lower at the balance; S&P 500 futures down 0.2%, Nasdaq futures down 0.2%
- Precious metals recover slightly after a quick and sharp drop yesterday
- Gold up 1.0% to $4,969, silver up 3.0% to $77.40
- Oil down on report that OPEC+ may resume production hikes in April
- WTI crude oil down 0.8% to $62.40
- US 10-year yields flat at 4.105%
- Bitcoin up 1.9% to $67,055
There were plenty of headlines to move the session along but none of which mattered all too much, as markets have their sole focus on the US CPI report coming up later today. That’s the key risk event and will be the deciding US data release this week, after markets struggled for firm direction following the non-farm payrolls on Wednesday.
It will be a big one to wrap up the week, with it being a long weekend in the US as well as extended holidays in China next week.
In terms of market action, there wasn’t anything that stood out in particular in European trading. The dollar kept firmer in a more solid position, with EUR/USD ranging around 1.1850-60 for the most part. Large option expiries at 1.1850 is helping to keep things in check there.
Meanwhile, USD/JPY is seen up 0.4% to 153.30 and AUD/USD is down 0.5% to 0.7055 as the dollar kept steadier throughout.
Besides that, equities were sluggish with US futures keeping a drag on overall risk sentiment. The focus stays on the AI disruption and software stocks in general. And that is weighing on the market mood on the session. European indices are down across the board with US futures also keeping lower by around 0.2% on the day.
In other markets, precious metals are up slightly after the sharp and sudden drop in US trading yesterday. It’s not indicative of much with market players eyeing volatility in risk trades as well with having to focus on the reaction to the US CPI report later. Gold is up 1% on the day to $4,969 with silver up 3% to $77.40.
Late on in the session, oil was a notable mover with prices falling after a Reuters report highlighting that OPEC+ may hike production again in April. WTI crude oil dropped from $63.00 to $62.40 now as it moves to test the 200-day moving average again.
Elsewhere, Bitcoin is seen up nearly 2% to just above $67,000 but remains poised for a fourth consecutive weekly drop.
Well, it’s all riding on the US CPI report next to see if there will be more drama in ending the week.
This article was written by Justin Low at investinglive.com.
