CPI key focus

This Daily Digest will cover:

• CPI key focus

• Crypto holding at the bottom of its range but no bounce

• FX remains range bound but Euro looking tired?

The markets have remained quiet in my absence with ranges holding in Crypto, Equities and FX despite bank runs, mixed employment data and a series of unpredictable central banks. To be honest it is hard to sit here and suggest that today’s inflation read out of the states will change much unless it is on the high side. The market is pricing in the FED rate as having peaked (I agree). However it is pricing in significant cuts this year (I disagree) and a strong number could cause the curve to reprice higher rates for longer. That said I suspect we get a bang in line number as the predictions have been decent this year for inflation, unlike NFP.

This leaves us with range bound markets that frankly look a little tired. The Euro/USC chart below highlights the gentle top that is trying to form as momentum from last year’s rally fades. A break of 1.0910/40 could see a market that is pretty long throw the towel in. The story is similar in Crypto where ETH and BTC have lost all momentum and the bounces are getting shallower. I remain short Equities and long ETH but will trim below 1800 in case we get a nasty move to 1650. Similarly in BTC sub 27,000 it is time to be prudent and trim, but I will be quick to reenter longs should the breaks lower prove to be false as I remain bullish this year on the asset class.

Euro/USD chart below – but it could be any tired looking asset that has done well this year – fresh impetus is required or we will head lower…

As always, good luck.

Richard Usher
Head of OTC Trading