Stock Rally and Yen Weakness: US CPI Awaits Amid Early Rate Cut Expectations

Stock Rally and Yen Weakness: US CPI Awaits Amid Early Rate Cut Expectations

This week, stock markets worldwide are showing upward momentum. Yesterday, major US stock indices all rose by more than 1%, and the Nikkei 225 also hit new record highs for consecutive days. Today, the Nikkei 225 has again reached a new peak. Several factors are driving this excitement, with the expectation of an early rate cut in the US being a significant one.

Focus on US Consumer Price Index (CPI)

Today's release of the US Consumer Price Index (CPI) will be crucial in determining whether these expectations become reality. The pre-release forecast suggests a year-over-year increase of +3.1% (down from +3.3% previously). The core CPI is expected to remain steady at +3.4% year-over-year. On a month-over-month basis, the overall CPI is anticipated to rise by +0.1% (previously flat), with the core CPI forecast to increase by +0.2% (unchanged from the previous month).

Today's Economic Indicators and Events

The main economic indicators to be released in overseas markets today are:

South Africa Manufacturing Production (May)

Brazil Retail Sales (May)

US Consumer Price Index (CPI) (June)

US Initial Jobless Claims (June 30 - July 6)

The US CPI is the key focus, but the trend in initial jobless claims is also worth monitoring.

Speaking Events

In today's speaking events, Atlanta Fed President Raphael Bostic and newly appointed St. Louis Fed President Mussa Lerma will be speaking in the latter part of the NY session. Additionally, a $22 billion auction of US 30-year bonds will be held.

Trading Strategy

I plan to trade based on the movements of the US dollar following the release of the US Consumer Price Index (CPI) today.