UPDATE: The latest UK Consumer Price Index (CPI) data has just been released, confirming a forecasted increase but revealing a disappointing services CPI figure. This development, occurring earlier today, has led to a slight rise in December cut probabilities from 80% to 85% as traders adjust their expectations for interest rates.
Market reactions have been muted despite the news, with no significant shifts in pricing. However, the total easing expected by 2026 has climbed from 59 bps to 63 bps. The implications of this CPI report could resonate through the market as analysts digest its effects.
In related news, Japanese Finance Minister Katayama has reaffirmed a dovish policy stance, emphasizing government cooperation with the Bank of Japan (BoJ) to achieve sustainable wage gains and bolster economic growth. Although her comments did not introduce new strategies, they contributed to the ongoing decline of the Japanese yen, with the USD/JPY exchange rate breaking above 156.00.
As for other markets, US equities have stabilized but remain off their lows, while the US dollar shows little movement today. Precious metals are experiencing a rebound, with both gold and silver extending their gains after bouncing from key support levels yesterday.
Traders are now looking ahead to the FOMC meeting minutes, set to be released later today. These minutes, which detail the discussions and decisions made by the Federal Open Market Committee, are typically less impactful given their release three weeks after the actual meeting. Nonetheless, Fed Chair Powell previously indicated that “a December cut is not a foregone conclusion—far from it,” which continues to shape market sentiment.
Investors are also preparing for upcoming US labor market data, which is expected to provide further insights into economic trends. With multiple factors at play, including the recent CPI report and ongoing currency fluctuations, the financial landscape remains dynamic.
Stay tuned for further updates as this story develops, and ensure you have the latest insights on these crucial economic indicators.
