Mon, Jun 05, 2023 @ 16:00 GMT
HomeLive CommentsUS consumer inflation in focus as investors gauge Fed's next move

US consumer inflation in focus as investors gauge Fed’s next move

Today’s spotlight is on US consumer inflation data, which is expected to show that headline CPI remained unchanged at 5.0% yoy in April, after falling for nine straight months. Core CPI, which excludes volatile food and energy prices, is predicted to slightly drop from 5.6% yoy to 5.5% yoy. Both the trajectory of inflation and unfolding regional bank issues in the US will play a critical role in Fed decision-making about the peak interest rate in the current cycle (if it hasn’t been reached yet) and the timing of the first rate cut.

Current fed funds futures data suggests a 78.8% probability that Fed will maintain interest rate at 5.00-5.25% following FOMC meeting on June 14. There’s a 21.2% chance of an additional 25bps hike to 5.25-5.50%. Notably, there’s a 63.8% likelihood of a rate cut beginning in September, marking the start of a potential loosening cycle.

Despite these uncertainties, investor sentiment remains relatively resilient, with major stock indexes preserving their near-term bullish trajectories. NASDAQ, for instance, is expected to continue rallying as long as 11798.77 support level holds. The key test, however, will be 8.2% retracement of 16212.22 to 10088.82 at 12436.48. Decisive break above this level could trigger further rallies towards 13181.08 cluster resistance level (50% retracement at 13157.41) and possibly beyond.

Conversely, if NASDAQ breaks below 11798.77 support level, it would suggest a rejection by 12436.48 Fibonacci resistance level, possibly triggering a deeper decline towards 10982.80 and potentially retesting 10088.82 low.

As always, these movements in risk sentiment will likely have a correlated impact on currency market trends.

Featured Analysis

Learn Forex Trading