Today, all eyes are on the US economic scene, with the release of the Consumer Price Index (CPI) taking center stage. The Federal Reserve has hit the pause button, largely owing to the uncertainties sparked by President Trump’s policies. However, if inflation figures indicate rising price pressures, it could complicate the Fed’s strategy of holding steady before contemplating more rate cuts.
Currently, traders are forecasting about 35 basis points of rate cuts for the rest of the year, with the first expected in September instead of July, as previously anticipated. This shift follows the recent whirlwind of political dramas initiated by Trump over the past two weeks.
While today’s inflation data is catching everyone’s attention, it might not ultimately steal the spotlight. Trump had mentioned plans to unveil reciprocal tariffs either on Tuesday or Wednesday. With no announcement made yet, investors remain on high alert for updates today. When previously asked about it, Trump’s response was a vague “we’ll see.”
It appears his team is scrambling to smooth out complications and implement these tariffs without needing Congress’s nod. Whether or not they succeed remains to be seen, and while the announcement might not drop today, it could emerge later in the week. So, staying vigilant is key.
In the interim, it might be wise to note that silence can be a stabilizing force on overall market sentiment. A strategy of “see no evil, hear no evil, speak no evil” could be beneficial.
If Trump postpones the announcement on reciprocal tariffs, it might encourage cautious investors to test the market’s waters. This isn’t the first time we’ve observed greed quickly overtaking caution, but there’s always the risk of being unprepared when Trump finally makes a move.
Currently, market conditions present a mixed picture. Treasury yields are on the rise again, yet the dollar faced some challenges, particularly against the euro and pound. USD/JPY bucks this trend, enjoying a third consecutive day of gains, up to 153.65 at present. The pair has climbed past its crucial daily moving averages, potentially signaling renewed buyer interest.
Meanwhile, gold’s impressive rally seems to be cooling off, dropping back to $2,884. Key levels to watch are the 100-hour moving average at $2,882 and the 200-hour moving average at $2,850, which could provide support.
As for stocks, yesterday’s performance was a mixed bag, with tech shares lagging in the US. Nonetheless, despite all the tariff talk, the equity charts have stayed relatively smooth, which might suggest something about the current market climate and underlying sentiment.
