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Inflation is still the hot debate in the market and the two-way volatility is something that traders and investors may very well have to get used to when navigating through things for the remainder of the year.

US CPI data saw inflation bets deal the first punch towards the Fed but the market is keeping from getting too carried away on the back of just one data print for now. It will take a couple more releases pointing in a similar direction (not necessarily CPI) to start to nudge the Fed and potentially get policymakers to change their stance.

But for now, the market reaction is more measured after the moves on Wednesday.

The dollar is still keeping steadier with little change observed so far. The franc was a solid performer yesterday and is holding its ground today as well, with EUR/CHF tracking around its 100-day moving average close to 1.0935.

I would argue that the dollar will observe a lot of push and pull as long as risk continues to prove that it can bounce back as it did yesterday.

That will keep things tricky in FX though higher yields may still favour carries against the yen for the time being, or at least in the longer run in any case.

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