US CPI Up Next
Ahead of the weekend we have one last major data focus today; US May CPI. The release is drawing plenty of attention ahead of next week’s FOMC meeting. We’ve heard plenty of debate recently between Fed hawks and doves. On the one hand, hawks are sticking to the view that the Fed will press ahead with the planned rate hikes for 2022, delivering at each of the remaining FOMC meetings of the year. Doves, however, are increasingly suggesting the Fed will take some time out following the July rate hike (June and July both fully priced in).
One of the main drivers behind doves’ argument is that inflation is already moderating and by end of summer will have cooled enough to warrant a pause. So, today’s data is important because, following the 50% drop in inflation over April, if CPI is seen cooling again in May, this will add weight to this view likely leading USD lower near term. However, if inflation was seen rebounding over May this will diminish doves’ argument, leading USD higher near term.
Where to Trade Today’s CPI Number?
NASDAQ
The tech sector has been highly responsive to changes in the USD/Fed outlook. If today’s data is USD bullish the NASDAQ is likely to head sharply lower. Price recently failed at the retest of the broken 12875.84 level. The market is now sitting on support at 12220.22. A break below here will target a run down to the 1154.72 level next.
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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.