Markets freeze before data release


Gold  1887,145

EURUSD   1,2167

DJIA  34468,50

OIL.WTI  69,575

DAX   15573,50

The EUR/USD and GBP/USD have been in a tight corridor for the last few days. But all that could change as soon as today! Why? At 2.30pm US inflation data for May will be released.



China’s producer price index was published on Wednesday. It rose immediately by 9% year-on-year, after rising 6.8% a month earlier. This has not been seen in 13 years, since September 2008. The reason for this increase remains the same: The appreciation of key commodities, which China is obliged to import. We are talking chiefly of iron ore and copper.
Monthly producer price data for China comes out slightly ahead of US data. In fact, they are a leading indicator. It’s a subtle hint that inflation continues to rise rapidly around the world. Which raises investor fears that US inflation data will also significantly exceed forecasts.

What can this lead to?

If the year-on-year consumer price index exceeds 5% (analysts expect 4.7%), we can expect a strong collapse in stock markets around the world on Thursday. U.S. Treasury yields would soar. And with it, the dollar will break out of the bandwagon and continue rising. This reaction will be based on the increased likelihood of a premature unwinding of the Fed stimulus and an increase in the discount rate.
In the EUR/USD this will lead to the risk of a renewal of the June lows at 1.1986. And in the GBP/USD it will lead to the removal of a huge amount of stops below 1.408, which have accumulated there over the past 3 weeks. It will be very interesting to watch the dynamics of gold. If it falls first on this negativity and then rallies back it will be a strong bullish signal. And the target of $2000 per troy ounce could be reached as early as June.

13.45 ECB interest rate decision
14.30 US Consumer Price Index for May

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.