The markets are experiencing partial profit taking in company shares and continuation of local growth of the US dollar ahead of the publication of important data, namely America's consumer inflation.
Today, economic statistics on consumer inflation, which are extremely important for understanding the prospects of US monetary policy, will be released. In particular, the core consumer price index and the overall value of consumer inflation will be reported. According to the presented forecast, the core consumer price index (CPI) in monthly terms should add 0.2% in March against the increase of 0.1% in February. As for annual terms, the figure should grow by 1.5% against the 1.3% a year earlier. In line with expectations, the March consumer price index (CPI) should rise by 0.5% against the February increase by 0.4%, while the indicator's annual value should sharply surge from 1.7% to 2.5%.
The expected economic statistics will be clearly evaluated by the markets in the context of the Fed's future stance on monetary policy. This continues to worry investors despite the active pressure from the Fed members and its head. In particular, J. Powell's influence on the markets, which is manifested in constant statements that the regulator will not consider raising interest rates and stopping the process of buying government bonds, rising inflation and most importantly, its possible consolidation above an acceptable level of 2.0% in the long term, will still force the Central Bank to revise its monetary rate.
Fearing that today's publication of data will confirm the worst expectations, the market is experiencing partial profit-taking in company shares, as well as a local growth in the USD exchange rate. All this is taking place amid the renewed growth in Treasury yields. Here, the yield of the benchmark 10-year Treasuries rose by 0.88% to 1.691%. We believe that if the published values of inflation indicators show an increase in inflationary pressure, this will lead to the continuation of at least a local increase in profitability, and at the same time, to a strengthening of the US dollar. In this context, there may also be a slight decline in US stock indices.
We believe that it is necessary to make decisions on trading operations after the publication of consumer inflation data, which will be released at 12.30 Universal time today. We are inclined to believe that the US dollar will most likely receive support, while the stock markets will slightly experience a downward correction.
Forecast of the day:
The EUR/USD pair is consolidating in a narrow range of 1.1860-1.1920. If the data on consumer inflation turns out to be higher than expected, it will put pressure on the pair, leading it to the level of 1.1790. But if they are below the forecast, the pair can be expected to continue its growth to 1.1985. We believe that it is necessary to buy or sell the pair after breaking the levels of 1.1920 and 1.1860.
Gold's price reacts strongly to the expected publication of inflation data. It can both rise and fall. If inflation rises, the price will continue to decline to 1676.75 after breaking the level of 1721.00. If not, it will rise to 1757.45, but only after moving above 1736.35.