Prior +2.6%Core CPI +2.2% vs +2.2 y/y expectedPrior +2.3%Well, the headline reading is the highest since September 2023 and it reaffirms the impact of surging energy prices. When looking at core annual inflation, we’re still not seeing any spillovers yet as the reading there is softer than it was in March even.Looking at the breakdown, food price inflation was seen at 2.5% with energy price inflation rising the most on a yearly basis by 10.9%. Services inflation also continues to keep sticky at 3.0% even if down from 3.2% previously. At the balance, that is still keeping core prices above the 2% threshold and it’s still not quite ideal for the ECB even if the Middle East conflict were to not happen.But now, the picture has completely changed because of the US-Iran war. The prudent step by the ECB is to stay on the sidelines but they’re not in an enviable spot in making a choice as we look to June.Circling back to the report, the monthly estimates also reaffirm the jump in energy prices mostly with that being up 3.0%. Food price inflation was only up 0.5% on the month with services inflation up 1.1% in April. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Core CPI’s uptick to 2.6% signals potential volatility ahead for traders. With the headline inflation hitting its highest since September 2023, the market’s focus is likely to shift toward energy prices and their ripple effects on consumer spending. While core inflation remains stable at 2.2%, the divergence suggests that traders should brace for possible shifts in monetary policy. If energy prices continue to rise, we could see a more aggressive stance from the Fed, impacting both equities and commodities. Keep an eye on key levels in the energy sector, as a breakout could lead to broader market implications. The flip side is that if core inflation remains contained, it might give the Fed room to maintain a more dovish approach, which could support risk assets. Watch for any significant moves in the energy market, as they could dictate the next steps for both the forex and crypto markets, particularly in pairs sensitive to inflation data. Immediate attention should be on the upcoming Fed meetings and any statements regarding inflation expectations. 📮 Takeaway Monitor energy prices closely; a breakout could trigger significant market shifts, especially in equities and forex, impacting trading strategies.

Prior +1.7%HICP +2.9% vs +2.5% y/y expectedPrior +1.6%Headline annual inflation continues to run up as a result of surging energy prices and that is the case across every country at the moment. Of note, there is a sharp rise in the prices of unregulated energy products (+9.9%) and regulated energy products (+5.7%) as well.When looking at core annual inflation though, that is seen slowing from 1.9% in March to 1.6% in April. So, that’s one bright spot for now. But as higher energy prices continue to be more sticky, expect that to have a more profound impact on core prices down the road. That especially if the Middle East conflict continues to drag on for longer.In any case, the overall Eurozone reading here is the more pertinent report to focus on at this time. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Inflation is climbing, and energy prices are the main culprit—here’s why that matters for traders right now. With headline annual inflation rising due to a 9.9% spike in unregulated energy prices, traders need to brace for potential volatility across markets. This uptick could lead central banks to reconsider their monetary policies, impacting everything from forex pairs to crypto assets. If inflation continues to exceed expectations, we might see a stronger dollar as investors flock to safety, which could pressure commodities and risk assets. Keep an eye on the correlation between energy prices and broader market movements; a sustained rise in energy costs could trigger sell-offs in equities and crypto alike. On the flip side, if inflation pressures lead to aggressive rate hikes, it could create buying opportunities in sectors that typically benefit from higher rates, like financials. Watch for key resistance levels in energy stocks and commodities, as well as any shifts in central bank rhetoric. The next few weeks will be crucial, especially with upcoming economic data releases that could further influence market sentiment. 📮 Takeaway Monitor energy price trends closely; a sustained rise could trigger broader market volatility and impact forex and crypto positions significantly.

The Bank of England is expected to keep the Bank Rate unchanged at 3.75% today with one or two hawkish dissenters. At the last meeting, the BoE delivered a hawkish hold with unanimous decision to leave rates unchanged and the removal of the easing bias. Moreover, in the minutes, policymakers made it clear that they are focused on the risk of second-round effects with several members willing to hike rates if needed. Going into this meeting, the economic data hasn’t been screaming for urgent hikes. The latest UK CPI saw headline inflation rising to 3.3% vs 3.0% in the prior month, but that was very much expected due to the energy shock. Core CPI ticked lower to 3.1% vs 3.2% prior, but Services CPI remained stubbornly elevated at 4.5% compared to 4.3% in the prior month.The UK unemployment rate fell to 4.9% vs 5.2% in the prior month with some slight easing in wage growth, although the data beat expectations. All in all, it wasn’t a bad report but not good either. The problem is that these are lagging data points and the more timely ones like the S&P Global PMIs disclosed a more concerning picture. The survey showed an acceleration in economic activity in April alongside a record-breaking surge in business costs. The agency noted though that “the improved rate of expansion is in part a reflection of a short-term boost from a rush to secure purchases ahead of feared price rises and supply shortages linked to the war”.The bad news is that businesses across both the manufacturing and services sectors reported the steepest rise in average cost burdens in more than three years, with some measures of input price inflation reaching their highest levels since the survey began nearly three decades ago. The agency noted that “prices are rising not just because of surging energy costs, but also due to increases in charges levied for a wide variety of goods and services, with price hikes often stoked by supply concerns”. Businesses cited also strong wage pressures.The surge in costs, driven primarily by energy price shocks and mounting wage pressures, suggests that inflationary pressures could become more entrenched forcing the BoE to retighten policy to avoid erasing the progress achieved since 2022.Given that they already basically adopted a hawkish bias in the prior meeting and the more timely data is pointing towards heightened inflation risk, the BoE might signal a rate hike for June. The market is pricing in just 63% probability of a rate hike in June, so there’s still some room for the GBP to appreciate on the back of a hawkish BoE. That would also weigh on the FTSE 100. A surprise hike today would trigger a bigger move in the GBP and weigh more heavily on the FTSE 100. I would exclude any type of dovish tone for today’s meeting, so in my opinion, the risks are skewed towards the upside for the GBP and downside for the FTSE 100, with the stock market being more vulnerable. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The Bank of England’s decision to hold rates steady at 3.75% signals a cautious approach amid economic uncertainty. With one or two hawkish dissenters, this could indicate a split in the committee’s views on inflation and growth. Traders should be aware that the BoE’s stance could impact GBP pairs, particularly if dissenters push for a more aggressive tightening in future meetings. The market’s reaction today will likely hinge on any hints regarding future rate hikes or shifts in economic outlook. Keep an eye on the GBP/USD and EUR/GBP pairs for volatility as traders digest the implications of the BoE’s decision and any accompanying commentary. Watch for key support and resistance levels around recent highs and lows, as these will guide short-term trading strategies. 📮 Takeaway Monitor GBP pairs closely today; any hints of future rate hikes could trigger volatility, especially around key support and resistance levels.

From earlier:Japan’s Katayama: We are getting closer to taking decisive step in FX marketJapan’s top currency diplomat issues final warning before action in FX marketThis time, they’re not beating around the bush and being very explicit about it. Essentially, they’re giving currency traders one final offramp to get out of the way before they step into the market.It still counts as a form of verbal intervention and they hardly ever offer such comments even during times when they are about to intervene. So, why do this now?Well, to put things quite simply is that Tokyo officials are desperate. The fact remains that almost every fundamental factor out there is working against the Japanese yen currency at the moment.The Takaichi trade is still running in the background and perhaps may even worsen if the government has to compile a supplementary budget to push out more energy subsidies. Adding to that is the BOJ facing up against cost-push inflation now in their efforts to raise interest rates. And that will come against a backdrop of a faltering economy, which is taking a massive hit from surging oil prices.As the Middle East conflict continues to drag on, the situation just becomes even more perilous for the Japanese economy.Tokyo officials are well aware of the current predicament. But unless the fundamental backdrop turns around, they also know very well that any intervention efforts may not be lasting. And that was the case with what we saw back in July 2024, before USD/JPY reversed back higher to cut out the intervention drop by January 2025.And this time around, that turnaround could be even quicker considering the market backdrop and economic landscape.As such, Katayama and Mimura know that they have to pull out all the stops in trying to stop the rout. Hence, the comments above today. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Japan’s currency diplomat just dropped a major hint about potential FX intervention, and here’s why that matters: When a central figure like Katayama signals a decisive step in the FX market, it usually means volatility is on the horizon. Traders should be prepared for sharp movements in the yen, especially if the Bank of Japan decides to act on these warnings. The current sentiment suggests that the yen could be facing downward pressure, and intervention could be aimed at stabilizing it. If you’re holding positions in USD/JPY, keep an eye on the 150 level; a breach could trigger a wave of selling or buying depending on the intervention’s timing. But don’t just focus on the yen—this could ripple through other markets. For instance, pairs like EUR/JPY and AUD/JPY might also react sharply. Watch for any sudden shifts in trading volumes or sentiment indicators as traders position themselves ahead of potential action. The next few days could be crucial, so stay alert for any announcements or market movements that could signal intervention. 📮 Takeaway Keep a close watch on USD/JPY around the 150 level; intervention could trigger significant volatility in the FX market.

It’s about a 100+ pips drop in around ten minutes. I wouldn’t pin this as actual intervention but it might be another case of a ‘rate check’ being performed by Tokyo. The pair already dropped to around 159.20 from 160.50 levels earlier in the day, before a sharp drop now to test waters below the 158.00 mark.If it were actual intervention, I reckon we’d see a more sustained 300-400 pips fall rather than this sort of dip. That especially with some bounces back to around 158.40-50 again amid some pushing and pulling.As a reminder, a ‘rate check’ is also part of the final call in Tokyo’s playbook before intervention. It was definitely the case in past incidents even if there wasn’t one that followed up the previous ‘rate check’ earlier this year. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight A rapid 100+ pip drop in USD/JPY signals potential volatility ahead. This move from 160.50 to 159.20 in just ten minutes could indicate a ‘rate check’ by Tokyo, which often precedes more significant market shifts. Traders should be cautious, as this kind of sharp movement can lead to further selling pressure if it triggers stop-loss orders. Keep an eye on the 159.00 level; a break below could open the door for more downside, while a bounce back above 160.00 might suggest a temporary bottom. The broader context here is the ongoing uncertainty around interest rates, especially with the Fed and BOJ’s contrasting stances. If the BOJ is indeed testing market waters, it could lead to increased volatility not just in USD/JPY but also in related pairs like EUR/JPY and AUD/JPY. Watch for any comments from Tokyo officials that might clarify their stance, as these could provide critical insights into future price action. 📮 Takeaway Monitor the 159.00 support level closely; a break could lead to further downside, while a recovery above 160.00 may signal a reversal.

USD/JPY is now down 1.6% to 157.60 and that marks about a 300 pips decline from when Japan finance minister Katayama came out earlier to deliver one final intervention warning to markets. Of note, the pair is seeing a sharper decline in the past half-hour with that accounting for about half of the drop.But at the same time though, it comes as the dollar is also sliding across the board against other major currencies. USD/CHF is down 0.6% to 0.7860 while AUD/USD is up 0.5% to 0.7150 on the day. Even EUR/USD is now up 0.2% to 1.1700 after having been relatively muted earlier on in the session.As much as I’d like to pin this to Tokyo intervening, the price action doesn’t really feel like it is one. We’re seeing tiny bounces in USD/JPY amid the sustained volatility in this 30 minutes and that doesn’t quite fit the bill with actual intervention attempts. Typically, you’d see a quick and sudden 200-300 pips drop with no pushback whatsoever. So again, this could be a case of a ‘rate check’ being performed.Circling back to the dollar though, the timing of all this is a bit tricky. Let’s be reminded that this is also the end of April and month-end flows could also be a big factor driving part of the market move here. From earlier this week: Strong dollar selling expected for this month-end – Credit AgricoleBesides that, equities remain in a bit of a bind but holding steadier overall. S&P 500 futures are up 0.2% while European indices are keeping more mixed with the DAX up 0.3% but CAC 40 down 0.6% on the day. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight The USD/JPY’s 1.6% drop to 157.60 signals heightened volatility and potential intervention risks. This decline, roughly 300 pips since the finance minister’s warning, reflects traders’ immediate reactions to Japan’s commitment to stabilize the yen. With the pair’s recent sharp decline, traders should be cautious of further moves, especially if the Bank of Japan steps in. Watch for key support levels around 157.00, as a break below could trigger more selling pressure. Conversely, if the pair rebounds, it might indicate a temporary stabilization, but the overall trend remains bearish. Keep an eye on broader market sentiment and any further comments from Japanese officials, as these could lead to significant price swings in the coming days. 📮 Takeaway Monitor USD/JPY closely for support at 157.00; a break could lead to increased selling pressure.

Dow Jones Industrial Average (DJIA) futures dropped close to 0.70% on Wednesday, falling from a session high near 49,250 to a fresh session low around 48,700 during Powell’s press conference before staging a sharp final-hour recovery that returned price to trade close to 48,790. 🔗 Source 💡 DMK Insight The DJIA’s near 0.70% drop during Powell’s press conference highlights market sensitivity to Fed commentary. Traders should note the volatility around key levels, with the index bouncing off the 48,700 mark. This suggests a potential support zone, but the rapid recovery to 48,790 indicates a tug-of-war between bullish and bearish sentiment. If the DJIA can hold above 48,800 in the coming sessions, it might signal a bullish reversal, but a drop below 48,700 could lead to further selling pressure. Keep an eye on related markets like tech stocks, which often react to Fed signals, and watch for any shifts in trading volume that could indicate institutional interest or caution. The real story is how traders interpret Powell’s comments moving forward, especially regarding interest rate expectations and economic growth forecasts. 📮 Takeaway Watch for DJIA to hold above 48,800 for bullish signals, but a drop below 48,700 could trigger further declines.

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