India’s CPI rises to 3.48% in April, driven by accelerating food inflationIntel stock analysis today: After a 510% surge, is INTC starting to show topping risk?US April NFIB small business optimism index 95.9 vs 96.1 expectedGermany May ZEW survey current conditions -77.8 vs -77.8 expectedUSD/JPY rebounds into a key resistance as interventions can’t stop yen’s slideECB policymaker Nagel says data will determine ECB’s decision in JuneUS, Japan both believe forex volatility is undesirable – BessentWhat is the distribution of forecasts for the US CPI?The overall risk mood leans more defensively as we get into European trading todayWhat are the main events for today?A quick drop in USD/JPY before bouncing back upGermany headline inflation nudges up on higher energy prices due to Middle East conflictFX option expiries for 12 May 10am New York cutUS, Japan maintains robust coordination in dealing with FX market volatility – BessentJapanese yen starting to slip away again, will Tokyo officials step in?The risk mood in the session has been leaning on the defensive ahead of the US CPI report in roughly an hour. The culprit though is the lack of any breakthrough in the US-Iran stalemate. We’ve been getting reports since yesterday that Trump is now considering a resumption of the war more seriously as the ceasefire holds on “life support” after a “garbage” Iran’s peace proposal. The reports added that no major decision is expected before Trump-Xi summit.The most notable mover was the Japanese yen as the currency whipsawed early in the session after another suspected intervention. US Treasury Secretary Bessent reaffirmed in a post on X “the strong economic partnership between the United States and Japan”. He also added that the level of communication and coordination between their teams in addressing undesirable, excess volatility in currency markets continues to be constant and robust. This wasn’t the culprit for the spike in the yen though and in any case, the move was quickly erased and the USD/JPY pair rallied back into the key resistance zone around the 158.00 handle. The macro backdrop remains negative for the yen and this is likely to keep weighing on the currency.In terms of economic data, we got the German ZEW index showing business conditions worsening further, with it being the worst since December last year. The US NFIB Small Business Optimism Index was basically unchanged from the prior month, with inflationary pressures continuing to be the major challenge. Lastly, India’s inflation climbed to 3.48% in April, primarily driven by firming food prices.In the American session, the main highlight will be the US CPI report. Headline CPI Y/Y is expected at 3.7% vs 3.3% prior, while Core CPI Y/Y is seen at 2.7% vs 2.6% prior. Elevated energy prices have pushed headline inflation back above the 3.0% mark. Inflation was elevated before the war started though and this latest shock just added more upside risk. I don’t think today’s data is going to change much for the market unless we get significant deviations from the expected numbers.For context, the annual Core PCE rate (which is what the Fed targets) has been sticky near the 3.0% level since 2024 and recently rose to the highest level since December 2023. Also, let’s not forget that the Fed has been missing its 2% target since 2021. Fed’s Hammack recently said that there are concerns among businesses that an inflationary mindset is starting to become entrenched in people’s minds.In the markets, it’s been kind of consensus that the Fed has abandoned the 2% target and now focuses more on keeping it in a 2-3% range like the RBA. With such expectations it could be very hard to get inflation sustainably back to the 2% target without a more significant slowdown in the economy. The problem is that the Fed has been focusing more on the labour market and the soft landing, which had the side-effect of indirect financial easing through stock markets. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight India’s CPI hitting 3.48% is a wake-up call for traders: food inflation is on the rise. This uptick in consumer prices could lead to tighter monetary policy from the Reserve Bank of India, impacting the Indian Rupee and related assets. Traders should keep an eye on the USD/INR pair, especially as the USD/JPY is facing resistance, which could signal a shift in risk sentiment. If the Rupee weakens further, it might trigger a broader sell-off in Indian equities, particularly in sectors sensitive to consumer spending. On the flip side, Intel’s massive 510% surge raises questions about sustainability. If INTC starts to show topping risk, it could lead to profit-taking, affecting tech stocks across the board. Watch for any signs of reversal in INTC, as this could set the tone for the tech sector. Overall, monitor the upcoming economic indicators and sentiment shifts closely, as they could create volatility in both currency and equity markets. 📮 Takeaway Keep an eye on the USD/INR pair as rising food inflation could lead to a weaker Rupee, impacting Indian equities and related assets.

CPI Y/Y 3.48% vs 3.80% expectedPrior 3.40%Full report hereIndia’s annual inflation rate climbed to 3.48% in April, a slight uptick from the 3.40% recorded in March. The headline figure remains within the Reserve Bank of India’s comfort zone of 2% to 6%, and below the medium-term target of 4%.The rise was primarily driven by firming food prices, with food inflation climbing to 4.20% as costs for essential items began to edge higher. The RBI recently took a cautious approach in light of the situation in the Middle East. The central bank maintained the repo rate at 5.25% and held its “neutral” policy stance, signaling that while it is satisfied with the current downward trajectory from previous years, it is not yet ready to pivot toward rate cuts.The RBI’s forecasts project inflation to average 4.6% for the 2026-27 fiscal year, with a warning that we might see a gradual build-up toward a peak of 5.2% later in the year.Although transport inflation remained relatively flat in April at -0.01% due to existing subsidies and price management, the surge in wholesale global energy prices and Aviation Turbine Fuel (ATF) suggests that the “pass-through” to consumers may be inevitable if the conflict persists. The RBI has explicitly flagged “imported inflation” as a primary concern, noting that high crude oil prices could not only push up fuel costs but also increase the input costs for fertilizers and logistics, eventually feeding back into food prices. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight India’s CPI ticked up to 3.48%, but here’s why that matters for traders: While the increase from 3.40% in March is minor, it signals potential shifts in monetary policy. The Reserve Bank of India (RBI) has a target range of 2% to 6%, and this uptick still keeps inflation comfortably within that zone. However, a sustained rise could prompt the RBI to reconsider its stance on interest rates, especially if inflation trends upward. Traders should keep an eye on how this affects the Indian Rupee (INR) against major currencies, particularly if the RBI signals any tightening measures. Watch for key levels around 82.00 for USD/INR, as a break above could indicate bearish sentiment for the Rupee. On the flip side, if inflation stabilizes or declines in the coming months, it could provide a bullish outlook for the INR. The market’s reaction to this CPI data will be crucial, especially with upcoming economic indicators. Keep an eye on the next CPI release and any comments from RBI officials, as these could provide further insights into future monetary policy shifts. 📮 Takeaway Monitor USD/INR around 82.00; a break above could signal bearish sentiment for the Rupee amid rising inflation concerns.