Markets Remain Uncertain Ahead of Thursday’s US CPI Inflation Numbers

Today we are seeing some USD buying that appears a bit out of place, as Treasury yields are flat on the day after a jump higher in the European session but then pulled back off their highs. US Stock markets opened with a bearish gap lower but are trending higher now which is often bearish for the USD, but the Buck is gaining nonetheless.

GOLD has reversed and slipped below $2,030 while EUR/USD has dropped 1.0911, with the post-NFP low of 1.0880 being the main level to watch. This forex pair is breaking into new session lows and has fallen below a major downside support objective at 1.0930.

Yesterday, the price dipped below that zone, only to reverse higher within an hour and resume the upward action, which resulted in the price approaching 1.10 again. Will we see a break below 1.09 today and be able to maintain the downward pressure? If the selloff continues indeed, the next target area comes between 1.0880. A move back up should be accompanied by disappointment from sellers, followed by a return to the upside as sellers turn to buyers.

GDP Estimate Tracker from the Atlanta FED GDPNow    

• Atlanta Fed Q4 GDPNow estimate 2.2%
• January 3rd FED Atlanta Q4 GDPNow was 2.5%

The consensus for Q4 growth is around 1%, so the Atlanta Fed tracker remains much above it, although they are converging. The newest estimate is 2.2%, up from 2.5% on January 3.

After recent releases from the US Bureau of Economic Analysis, the US Census Bureau, the US Bureau of Labor Statistics, and the Institute for Supply Management, the nowcasts of fourth-quarter gross personal consumption expenditures growth and fourth-quarter gross private domestic investment growth decreased from 2.9 percent and 0.5 percent, respectively, to 2.6 percent and -0.6 percent, while the nowcast of the contribution of the change in real net exports to fourth-quarter real GDP growth increased from -0.23 percentage points to -0.07 percentage points.

EUR/USD Live Chart