From Marc Chandler at Bannockburn Global Forex:
Overview: Equity markets are mostly weaker, and benchmark 10-year yields are a little softer. The foreign exchange market is subdued ahead of today’s US CPI. The large bourses in Asia Pacific region with the exception of India worked lower and Europe’s Stoxx 600 is off for the second consecutive session. US futures have a heavier bias. Yesterday the US bank share indices filled the gap created at the end of last week but recovered. Today’s price action will be important from a technical perspective. Benchmark 10-year yields in the US and Europe are mostly around two basis points lower, which leaves the 10-year Treasury yield near 3.50%.
The dollar has been confined to narrow ranges against the G10 currencies. The derivatives markets have begun pricing in a small chance of a hike (~15%). Leaving aside the Norwegian krone, the greenback is +/- 0.1% against the major currencies. Emerging market currencies are mixed, but we note that the Mexican peso has made a marginal new six-year high. Gold is trading quietly in about a $6 range on either side of $2032 as in consolidates. June WTI stalled after reaching nearly $73.80 yesterday. It is near $72.45 as it too consolidates its recovery from last week’s low near $63.65.
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....America
Even though the debt ceiling and the elevated concerns about US regional banks continues to hang over the market, attention today turns to the April CPI. The year-over-year pace of inflation is moderating, and there is scope for further declines in here in the first half. In fact, by the end June, US year-over-year headline CPI could slip below 4% and the core rate could be below 5%. However, there are two problems on the horizon. First....
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