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  • Writer's pictureMike Paterson

US CPI data looming

Wednesday 15 May 2024

With markets pricing in a 35% chance for a FOMC rate cut in July versus 85% in September today's eagerly awaited US CPI data should certainly get the algos moving but whether it makes the picture any clearer remains in doubt. Yesterday's stronger headline PPI readings saw the Greenback being grabbed in a rush but with the revisions significantly lower we saw a quick reverse and beyond to leave markets suitably second-guessing for today's outcome.

We've seen USDJPY retreat to test below 156.00 amid the USD supply generally but losses tempered along the way by some JPY supply which in turn has helped underpin cross and therefore core pairs but turning lower as I type. Today's Fed speakers include Kashkari and Bowman. The Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow. Remember don't get greedy or over-analyse.

Equities fell in NY on the headline data but then bounced on the revisions and steady as European trading gets underway bringing with it some better risk appetite again. WTI is holding $77.80-00 after failing at $78.40 in Asia following yesterday's hold of $77.30-50 amid the ongoing variables. Gold continmues to hold $2335 and back up through $2360 this morning. Expect profit-taking to continue in the rallies but appetite for the shiny stuff remains.

GBPUSD: Holding 1.2520 post-PPI helped by the large option interest I've been warning about and now settled above 1.2580 resistance amid the USD supply and testing 1.2600 as I type. EURGBP: Capping around 0.8605 but still holding 0.8585-90 as the ECB/BOE rate cut conjecture and cross flows continue. GBPJPY: Holding 196.00-20 yesterday and a decent rally amid the JPY supply but capping around 197.00-10 amid USDJPY price action and the intervention second-guessing.

EURUSD: Support around 1.0765 post-PPI and up through the 1.0800-10 resistance yesterday to now post 1.0830 amid the USD supply returning. USDJPY: Support coming in at 155.75 this morning as I type after capping into 156.80 post-PPI. Intervention risk/ rate hike talk casts its shadow still.

Traders - For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email

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