CIBCFX FlowsIt is certainly quieter day ahead of US inflation numbers. Our economics team wrote US inflation will likely continue to decelerate in the months ahead due to base effects, but that will be limited by supply chain disruptions in goods sectors tied to lockdowns in China, strong underlying demand for services, and the tightening in the labour market. We are in line with consensus, market is expecting +0.2% over the month from +1.2%, up 8.1% over the year from +8.5%.Chinese April inflation rose to 2.1% from 1.5% month earlier. Producer price index rose 8.0% from 8.3%. Dong Lijuan, senior statistician at the NBS said the uptick in consumer inflation was attributable to virus outbreaks and high global commodity prices.US Treasury prices have been stable, Nasdaq e-minis up nearly 1% for the morning.Small risk-off at the start pushed the $YEN to 130.235 and that was it. Activity slowed, the pair locked itself in narrow range. Rumour that bids have been reported in the low 129.90s and profit taking in the 130.50s.AU$¥ had more action than the US$ legs. Small risk-off at the start, I guess some are still nervous over yesterday’s move below 90-handle. I will stick to same view as yesterday, I like this higher. AU$ seemed to have found a base ahead of 0.6910 and intraday resistance near 0.6980.CAD strengthened along with the firmer oil futures. July contract returned to $100 pb. $CAD slipped to 1.30055 but didn’t seem to have a follow-through, rest of the morning price action was stuck 1.3010-15. Then again, large strikes expiring today at 1.3000 for $1.47bn, another $1.9bn at 1.2950. Common knowledge barrier option at 1.3100, stops thereafter.CitiEuropean OpenA slight pickup in risk sentiment post the European close. USD was the worst performer in G10, being the only currency in the red. Gains in G10 were led by the high-beta currencies, with Antipodeans sitting at the top. Bostic reiterated overnight that he supports 50bps hikes, while Lisa Cook was approved by the US senate to join the Fed board. CNH saw CPI and PPI both beat consensus expectations, although the story in China revolved around performance in stocks, with the tech sector leading gains. Elsewhere, oil prices bounced higher.Looking ahead, the US CPI looms, while we hear from Bostic again later in the day. EUR will see a flurry of ECB speakers today, with ECB’s Lagarde’s speech likely to be the most relevant. RON and BRL will also see inflation prints today, while HUF sees central bank minutes post their latest 100bp hike. MYR will see a policy decision today, where Citi Economics is against consensus, calling for a 25bps hike to 2%.
Source: Tickmill
