Market Expects US Inflation to Fall Today

The market is eagerly awaiting US inflation data which is expected to show a substantial fall in the annualized rate, which may push the Fed into slowing its pace of rate hikes.

1. There are reports that Fed members are leaning more toward supporting a slower pace of rate hikes, as markets await the release later today of CPI (inflation) data. Markets are expecting annualized US inflation to decline from 7.1% to 6.5%. If the number is even lower, it can be expected that stocks will rise strongly, and the US Dollar will sell off.
2. Reports in Japan suggest that the Bank of Japan will consider side effects of its monetary policy at its meeting last week, giving more credence to the prospect of a tighter policy. The Japanese Yen rose on the reports, with the USD/JPY currency pair trading as low as ¥131.36 during the Tokyo session.
3. The long-term bullish trend in precious metals continues, with the price of spot Gold rising to an 8-month high above $1886. The price of spot Silver is also bullish, but less so. In the commodities sector, Copper has also made a strong bullish breakout to new multi-month highs. These assets are attractive to long-term trend traders in the long direction right now, as higher prices here are likely over the coming days.
4. In the Forex market, we currently see more in-trend movement in the major currency pairs, especially in the EUR/USD currency pair which has made another new 7-month high above $1.0776. The strong long-term technical trend against the US Dollar remains, with Japanese Yen the strongest major currency so far today, while the US Dollar is the weakest.
5. The price of WTI Crude Oil rose firmly yesterday on China’s reopening, despite the fact that the energy commodity remains within a well-defined long-term bearish trend.
6. Daily confirmed new global coronavirus cases decreased last week for the third consecutive week, but there are serious doubts over the veracity of China’s official statistics, which almost certainly dramatically understate new coronavirus cases.
7. It is estimated that 69.1% of the world’s population has received at least one dose of a coronavirus vaccination.
8. Total confirmed new coronavirus cases worldwide stand at over 669.8 million with an average case fatality rate of 1.00%. 
9. The rate of new coronavirus infections appears to now be significantly increasing only in China and Taiwan. A Chinese official in one province implied earlier this week that over 88 million people had been infected in just the past few weeks.