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CPI Cools Further
Expectations that the Fed will today pause its 15-month tightening program have jumped higher on the back of the latest round of US inflation figures released yesterday. US CPI for May was seen cooling to 4% YoY, down from the prior month’s 4.9% and below the expected 4.1% reading. In terms of monthly data, headline CPI printed 0.1%, below the 0.2% the market was looking for and below the prior month’s 0.4% while core inflation remained steady at 0.4%.
Fed Pause Priced In
The data has seen the market move to fully price in a rate pause at the FOMC later today. USD has softened accordingly while risk assets have moved firmly higher. Equities and commodities have seen fresh demand as have risk currencies. Looking ahead to today’s meeting, the focus will be on the guidance the Fed issues and its new rate projections. While the Fed is likely to still signal further tightening, the outlook might be less hawkish than many were anticipating prior to yesterday’s data which, if seen, should drive USD lower near-term, allowing risk assets room to move higher.
Technical Views
DOW
The index has rallied firmly off the May lows, breaking above 33576.05 and is now testing the 34523.58 level. This is a key resistance level for the index and a break here will be firmly bullish, turning focus onto a test of the 35503.24 level next, in line with bullish momentum studies signals.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.