Hello traders, welcome to Wednesday, a crucial day for the markets as we await the US inflation report. Today’s CPI data is expected to come in at 2.9% year-over-year and 0.3% on a monthly basis. This release is likely to set the tone for trading, especially for the US dollar and equity markets, as investors assess the potential impact on Federal Reserve policy.
Another major development is the proposed ceasefire deal between the US and Ukraine, negotiated in Saudi Arabia. The market is now awaiting Russia’s reaction to this agreement, but the news has already lifted sentiment in European indices. Optimism is evident in European stocks, which are pushing higher on hopes of geopolitical de-escalation.
Meanwhile, trade tensions remain a key factor influencing global markets. The 25% tariffs imposed by Donald Trump on steel and aluminum imports have officially taken effect, adding another layer of uncertainty to international trade. The back-and-forth nature of these trade disputes continues to create volatility, particularly in industries directly affected by tariffs.
Looking at market movements, yesterday’s session ended in the red, but today’s pre-market action shows cautious optimism. European indices are leading the recovery, while US futures remain more reserved as traders focus on inflation data and recession concerns.
On the currency market, the US dollar is showing slight strength ahead of the CPI report, while European currencies are pulling back slightly. However, the euro remains one of the strongest performers this week, maintaining resilience despite today’s mild correction.
Commodities are showing a mixed picture. Precious metals continue to climb higher, benefiting from safe-haven demand, while oil remains under pressure. Despite a small rebound attempt today, oil remains down 7% year-to-date, in stark contrast to gold, which is up 10% in 2025 so far. This divergence highlights the different market forces at play, with oil struggling amid economic concerns and gold gaining strength as a hedge against inflation and uncertainty.
All eyes will be on the US inflation report today, which has the potential to trigger significant moves across asset classes. A higher-than-expected print could reinforce concerns about sticky inflation, potentially strengthening the dollar and putting pressure on equities, while a softer reading could fuel hopes for rate cuts later this year.