market:
- S&P500 rose 1.1%
- WTI crude oil fell $0.12 to $77.81.
- Gold falls $28 to $2,154
- US 10-year bond yield rose 5.3bps to 4.156%
- US dollar leads, Japanese yen lags
The main event of the week started on Tuesday and certainly grabbed the market’s attention, but the price action was anything but calm. The numbers trend modestly positive, even with all the usual caveats, and the market’s initial reaction was as expected. The US dollar rose 40-60 pips across the board.
But soon the movement began to reverse, then completely reverse direction, and then even more.
But that’s not the end of the story, as all eyes were on the CPI, which clearly rose, with the two-year bond yield rising 6bps and the Fed lowering this year’s pricing to 83bps from 89 in advance data. The US Treasury Department confirmed this. The dollar started to rise again, eventually retesting the CPI highs.
However, it could not be broken, and the stock price showed strong price movements. The market found his AI enthusiasm hard to ignore and the USD began to fall, again erasing most (but not all) of his CPI movements.
On the net, most pairs are expected to end the day little changed as a result, which is something of a win for dollar bears. The exception is USD/JPY, where the market continues to try to pick out the Bank of Japan. The pair briefly rose above 148.00 before settling in the 147.60 range.
