It's been a pretty boring session as we haven't got any meaningful new information. The UK Employment data came out more or less in line with expectations although wage growth remains pretty high for the BoE. There's the usual trust issue with the UK employment data, so it didn't change anything in terms of market expectations.
We also got some promising signs in the soft data with the German ZEW and US NFIB surveys. Both improved as uncertainty and fears around tariffs and growth eased given the recent developments. We might see better and better data going forward.
Central bank officials are now starting to sound more cautious on rate cuts as fears around global growth ease and risk of a surge in demand could increase inflationary pressures, especially given that some central banks cut rates amid the trade war.
The US Trade Representative Greer said that they are moving as quickly as they can on trade deals and basically confirmed that the goal is a 10% global tariff rate. That should decrease general uncertainty and improve economic conditions.
In the American session, we have the US CPI report coming up. The focus will be on the Core figures with the Y/Y reading expected at 2.8% vs. 2.8% prior, while the M/M measure is seen at 0.3% vs. 0.1% prior. The economic data should start to gradually matter again going forward but bad data will likely be faded given the "U-turn" in trade policy.
In my opinion, the focus will now switch from growth back to inflation.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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