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[MARKET ANALYSIS] NOK outperforms after hot CPI, Antipodeans weaker after cool Chinese inflation

Newsquawk StaffPublished On the live feed at — 7 more headlines followed before this page went public
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[MARKET ANALYSIS] NOK outperforms after hot CPI, Antipodeans weaker after cool Chinese inflation

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  • G10s mostly range trading as the Buck positions into US CPI; CAD outperforms into BoC, antipodeans lag after soft Chinese inflation data, NOK outperforms post-CPI.
  • DXY -0.1%, lower on the day but still holding onto most NFP gains despite a sharp reversal in crude over the past few days. Levels reached around NFP, just above the 100 mark, will be watched closely as an inline/hot CPI print will help the index return to these levels. MUFG suggests that a hot print CPI (>4.3%) would likely trigger a sharp sell-off in US front-end rates, potentially pulling forward expectations for a hike towards October. ING contends a soft print would see DXY test the 99.50/60 area. 
  • US CPI: Expected to see the headline rise to 0.5% M/M (prev. 0.6%), driven primarily by another jump in energy prices, with the annual rate climbing to 4.2% Y/Y (prev. 3.8%), the highest since April 2023; meanwhile, core inflation is seen rising 0.3% M/M (prev. 0.4%) and the annual rate of core CPI is expected to rise to 2.9% Y/Y (prev. 2.8%).
  • CAD is one of the best performers ahead of the BoC confab, USD/CAD -0.1%. BoC is widely expected to leave its policy rate unchanged at 2.25% for a fifth consecutive meeting as it balances trade uncertainty against lingering inflation risks. Attention will centre on whether policymakers are more attentive to inflation or growth risks. Markets will also be watching for acknowledgement of Canada's technical recession, alongside any emphasis on the apparent Q2 recovery, stable core inflation and the Bank's position near the lower end of neutral as justification for maintaining a wait-and-see approach. USD/CAD could look to test 1.40 if US CPI comes hot, and BoC does not provide food for hawks.
  • NOK is the best G10 performer after hot CPI this morning surpassed consensus and was mildly above the Norges Bank's own forecast of 3.3%. Sell-side banks saw some risk that a hot inflation report could see board members begin to mull another hike at the June meeting. However, it is more likely that policymakers wait for more data and assess the developments in the Middle East. Nonetheless, CPI-ATE remains persistently high, which clouds the environment. NOK/SEK +0.4%, looks to test par after surpassing the level overnight.
  • Antipodeans underperform after Chinese inflation printed cooler than expected. CPI was steady at 1.2% Y/Y, cooler than economists had expected. PPI rose to 3.9%, lower than most estimates. As such, both Aussie and Kiwi weaker against the Buck by 0.2% and 0.1% respectively.

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