- US December CPI +7.0% vs +7.0% expected
- Fed's Beige Book: Many districts said supply chain disruptions constraining growth
- Fed's Bullard: “I actually now think we should maybe go to four hikes in 2022"
- Fed's Mester: Case is very compelling that the Fed removes accommodation
- US weekly EIA oil inventories -4553K vs -1904K expected
- Bank of Canada will hike this month - JP Morgan
- Goldman Sachs sees holes in the Chinese economy as lockdowns spread
- RBNZ's Bascand departs RBNZ early
- US December federal budget deficit $21B vs $25B expected
- US treasury auctions off $36 billion of 10 year notes at 1.723%
- Gold up $5 to $1826
- US 10-year yields flat at 1.73%
- WTI crude oil up $1.33 to $82.55
- S&P 500 up 15 points to 4728
- AUD leads, USD lags
Today was an impressive display of price action in FX and commodities. The market was whisper quiet ahead of the US CPI report. The numbers were a touch hot but it didn't matter as heavy USD selling emerged right after the report. Perhaps that's a bet that inflation is peaking or simply positioning. In any case, the dollar fell 30 pips quickly and the selling never stopped. As we near the end of the day, the dollar is at the lows across the board, falling 60-100 pips on the day across the board.
There were some key technical developments as the euro broke above its two-and-a-half month range to 1.1450. Cable is also challenging the 200-day moving average as its non-stop run continues.
AUD/USD rallied above the December highs and USD/CAD is breaking down after forming a head-and-shoulders top. The non-stop rally in crude is undoubtedly helping the loonie and natural gas joined the party today on cold weather forecasts with a 14% jump.
Keep an eye on NZD in the Asia-Pacific session as it also tests the December highs.
Overall, this is a tough one to square. There's certainly some risk appetite out there but stocks and bonds didn't do much today whlie the FX and commodities markets were lively. Another example is copper, which broke a recent double top in a 4% rally.
At the moment, the market simply doesn't care about covid risks in China.