EUROPEAN SESSION

In the European session, we don’t have anything on the agenda, so the price action will likely stay rangebound heading into the US CPI report. The US-Iran headlines are always a risk though and some meaningful development on that front can trigger big moves.

AMERICAN SESSION

In the American session, all eyes will be on the US CPI report although we will also have Fed Chair Warsh testimony. Headline CPI Y/Y is expected at 3.8% vs 4.2% prior, while the M/M measure is seen at -0.1% vs 0.5% prior. The Core CPI Y/Y is expected at 2.8% vs 2.9% prior, while the M/M figure is seen at 0.2% vs 0.2% prior.

The only data point that will matter is the Core CPI M/M which is expected at 0.2%, you can forget all the rest. Fed’s Williams said that he will consider rate hikes if monthly core inflation (using the PCE measure) runs above 0.2% in the second half of the year. Fed’s Waller, yesterday, made it clear that he won’t wait for such a long time and today’s report will be enough for him to vote for a rate hike in July in case the data beats forecasts. Waller has been a great leading indicator since 2021.

We also have Fed Chair Warsh semi-annual testimony before the House Financial Services Committee. This is unlikely to matter much as Warsh doesn’t like to give forward guidance, so he’s likely to repeat what he said at the last FOMC press conference.