Welcome to Wednesday, where inflation dominates the calendar. The focus is on the U.S. Consumer Price Index (CPI), expected to rise on a yearly basis from 2.7% to 2.9%, a key indicator that could shape market sentiment. Earlier in the day, we had inflation data from the UK, which came in slightly below expectations at 2.5% (versus the anticipated 2.6%). This initial miss sent the British Pound to new long-term lows, but the currency quickly found support and is currently attempting a recovery, with a shift toward the green side of the market.
In other currencies, the Japanese Yen is showing strength, continuing its upward momentum as a safe haven. On the weaker side, we have the Euro and the American Dollar, which are both struggling to find traction in Wednesday's trading.
Turning to indices, we are seeing a promising attempt at a bullish upswing. Yesterday's session ended with notable volatility, especially in the American session, but U.S. futures defended key supports. Today, those supports are serving as a base for a push higher. Similarly, European indices are climbing steadily during the middle of the European session, showing resilience and optimism.
Commodities are painting a mixed picture, with oil showing a slight uptick, while metals continue their impressive start to the year. Metals are clearly enjoying 2025, with palladium up 6% year-to-date, silver climbing 5%, and gold lagging slightly but still rising by 2.5%. These moves suggest that metals remain a favored asset class in the current environment.
The outcome of the U.S. CPI report will undoubtedly shape the market's direction today. Inflation data often acts as a critical driver for the dollar, commodities, and indices, so traders should keep a close eye on the release as it may determine whether the current bullish sentiment holds or fades.