The USD is little changed against the EUR, JPY and GBP to start the North American session. In the video above, I’ll take a look at the technicals that are defining bias, risk, and targets for those pairs ahead of CPI data at 8:30 a.m. ET.
Among other developments, geopolitics remains at the forefront for traders and markets. The US and Iran launched direct attacks throughout the night. After Iran downed a US Apache helicopter over the Strait of Hormuz on Monday (both crew rescued safely), the US launched retaliatory strikes on Iranian military targets near the Strait. Iran retaliated early Wednesday, with the IRGC launching missiles and drones at a US base in Jordan (five missiles were intercepted), the US Fifth Fleet in Bahrain and targets in Kuwait, while Saudi Arabia intercepted two cruise missiles and nine drones near Riyadh.
Meanwhile, firing between Israel and Hezbollah continued overnight, with Israeli strikes south of Beirut killing six people, and a hotel in suburban Beirut and a building in Baalbek later being attacked.
Trump’s tone on the peace agreement became very negative. On Truth Social he posted: “Iran is all talk and no action. The Middle East bully is dead!!! They took too long to negotiate a deal that would have been great for them, now they have to pay the price!!!”. Recalling earlier this week, he reiterated that an agreement was hours away.
Markets are still in control of pricing: WTI is currently up $1.78 to $89.90. This is up from the day’s low of $87.39. The highest is $90.42. Crude finds underlying support from the eighth consecutive weekly inventory draw (-9.1M bbl per API). Gasoline and cushion also fell
The EIA will release its numbers today at 10:30am ET, where crude is expected to draw -3.974M, gasoline -0.471M and distillates -0.488M.
US stocks are on the defensive with the Nasdaq falling heavily after a volatile day by nearly 1200 points. Tne NASDAQ is down -447 points. The Dow Industrial Average is down -440 points in premarket trading, and the S&P index is down -72.65 points.
US bond yields have risen 1.5 basis points over two years to 4.139%. The 10-year is up 1.0 basis points at 4.538%. The US Treasury will auction 10-year notes at 1 p.m.
Major US releases to take place today 8:30 am ETWhen the May CPI report will be announced. The major estimates are:
- title cpi but is expected +0.5% MoM versus +0.6% eastwith Annual rate expected to be +4.2% versus +3.8% east.
- core cpi but is expected +0.3% MoM versus +0.4% eastwith Annual rate expected to be +2.9% versus +2.8% east.
Headline CPI has been above the 2% target since March 2021, while core has been above that level on an annual basis since April 2021.
The Bank of Canada will announce its interest rate decision at 9:45 a.m. ET and is widely expected to leave its overnight rate unchanged. 2.25% For the fifth consecutive meeting. The central bank continues to balance inflation concerns amid signs of slowing economic growth and ongoing uncertainty over trade talks and global geopolitical developments.
While financial markets anticipate some risk of additional tightening later this year, most economists expect the BOC to remain on hold through the end of the year as it evaluates the impact of the upcoming USMCA review, labor market conditions and the macroeconomic outlook.
