Inflation Whipsaw and Safe Haven Strength

13 March 2025

Hello traders, welcome to Thursday’s session. We are coming off the back of US inflation data, which provided significant volatility on Wednesday. The report showed lower-than-expected inflation, with CPI at 2.8% instead of 2.9% on a yearly basis, and 0.2% instead of 0.3% on a monthly basis. The initial reaction was textbook—the dollar weakened, but shortly after, it reversed and strengthened beyond pre-data levels. Then, towards the end of the European session, another sharp decline followed, resulting in a whipsaw movement where traders saw action in both directions.

As we enter Thursday’s session, the US dollar is slightly stronger, showing resilience after yesterday’s swings. Safe-haven currencies are also leading the market, with the Swiss franc and Japanese yen gaining, while most other currencies are losing value. The yen is the strongest currency so far today, as risk sentiment remains fragile.

What’s on the Calendar?

Today’s economic focus shifts to Producer Price Index (PPI) inflation, with expectations set at 0.3%, alongside US unemployment claims, forecasted at 226,000. These numbers will further shape the Federal Reserve’s inflation outlook and could determine the next move for the dollar and broader markets.

Market Movements

Futures markets are flashing red, signaling another weak start for European indices and a continuation of negative sentiment in equities.
Commodities are mixed—oil is attempting a rebound, aiming to secure one of its few positive weeks in 2025. Meanwhile, gold had a strong session yesterday and is starting today with a slight pullback, but the overall momentum remains positive.

Traders should remain cautious as market sentiment remains fragile following Wednesday’s CPI-induced swings. Today’s PPI and unemployment claims data will be key drivers for the next leg of movement, particularly for the dollar and risk assets.