AUD/USD Dips on Soft Retail Sales

Australian retail sales posted a decline of 0.6% in the first quarter, following a downwardly revised reading of -0.3% in Q4 2022. The reading matched the consensus, but investors were not pleased with a second straight decline and the Aussie has lost ground today.  The National Australia Bank responded to the release by warning that a “consumer recession” had arrived.

Bitcoin Falls Under Pressure

Bitcoin lost around $1500 on Monday to $28.5K amid rumours of a possible collapse of Binance. The world’s largest cryptocurrency exchange twice suspended BTC withdrawals due to network congestion.

Sunset Market Commentary

This negative risk sentiment influences other markets in absence of relevant economic data. Hawkish ECB comments fail to inspire as well as more moderate governors outweighed the real hawks last week. Latvian ECB governor Kazaks repeated the mantra that quite some ground needs to covered and that further rate increases will be necessary to tame inflation.

The Big CPI Day Today

Today's key event will be US CPI for April. We look for a moderation in core CPI to 0.3% m/m down from 0.4% m/m and slightly below consensus expectation of 0.4% m/m. Focus will also be on the development in the services ex shelter component, which the Fed highlights as the key component to gauge underlying inflation pressure.

Is Inflation Good for Oil?

One frequent question is how would oil react to inflation data. Is inflation good for oil prices, or is it bad? Some argue that inflation is good for oil, because oil tends to perform well in periods of high inflation. This is true. But if oil performs better during periods of high inflation, it could be because higher oil causes higher inflation.

Sticky CPI May Challenge Fed Pause

The incoming US inflation report is set to be a major telltale sign on the Fed’s next move. Today’s top tier data release

British Pound Drifting ahead of US Inflation Report

The US release the April inflation report later today, and the consensus is that headline inflation will remain steady at 5.0%. The core rate is projected to tick lower to 5.5%, down from 5.6% in March. That would mean that the disinflation process has stalled, which would pose a major headache for the Fed in its quest to bring inflation back to the 2% target.

Bitcoin Lurks at a Local Bottom

The crypto market capitalisation grew 0.28% over the last 24 hours, as much as Bitcoin over this period. The market is now in a wait-and-see mode after Monday’s sharp drop. The top 10 altcoins show mixed dynamics, ranging from -2% (Polygon) to +1.75% (Litecoin).

German Inflation Slowing,But ECB Wants to Do More

German consumer inflation slowed to 7.2% y/y in April, Destatis said in its final estimate. The trend of decelerating price increases continues, although it remains well above the ECB’s target.

US: Inflation Remains Stubbornly Elevated, But April Data Shows Encouraging Signs 

There were definitely some encouraging signs in this morning's CPI numbers. The continued deceleration in shelter costs suggests that we are starting to see some passthrough from last year's pullback in rental rates, which should continue for the next several months. Meanwhile, price growth across non-housing services decelerated to its slowest month-on-month pace of growth in nearly two years.