April inflation data due in US today - 11.5.2022

On Tuesday, the US dollar index rose slightly for the 4th day in a row, but failed to make a new 20-year high. Remember that the current wave of increase began last week and was caused by the increase in the Fed rate to 1% and good data on the labor market (Nonfarm Payrolls). There were no important economic data in the US yesterday. Now the US dollar index is correcting down slightly before the publication of a significant inflation indicator for April. According to forecasts, it may decline to 8.1% y / y from a 40-year high of 8.5% recorded in March. Theoretically, a slowdown in consumer price growth could delay further tightening of the Fed's monetary policy. According to CME FedWatch, the Fed will raise rates by another 0.5% at its next meeting on June 15. The probability of this is 90%, but it may decrease in the event of a sharp drop in inflation. In Australia, an unexpectedly weak Westpac Australia Consumer Sentiment indicator came out this morning. In May, it collapsed by -5.6%, while it was expected to grow by +0.7%. This is the maximum drop in this economic indicator since August 2020, when there was a coronavirus pandemic.

Bitcoin yesterday was unable to immediately break down the psychological level of $30,000 and is now trying to correct upwards. Since the beginning of April, it has fallen in price by about a third. The exclusion of Russian players from crypto-exchange trading amid economic sanctions had a negative impact on the cryptocurrency market. Most likely this is a temporary phenomenon. However, crypto exchange Coinbase reported a $430 million loss in the 1st quarter and a 27% decrease in revenue. Among the positive news, it can be noted that tomorrow, on May 12, trading in shares of three cryptocurrency exchange-traded funds (ETFs) should begin for the first time in Australia. Previously, the launch of their securities was constantly postponed. In addition, the list of countries in which cryptocurrencies are actively used is expanding. The first among them was El Salvador, and now Portugal, Singapore, Malta and Nigeria have joined it.

There was no single trend on the US stock market yesterday. At the beginning of trading, investors took positively the opinion of New York Fed President John Williams and Cleveland Fed President Loretta Mester that the US economy will grow smoothly and inflation will decline. This does not require an excessive increase in the Fed's rate. Such a forecast contributed to a drop in the profitability of U.S. 10-year Treasury is below the psychological level of 3% per annum. Shares of the main IT companies Microsoft, Alphabet, Apple and Facebook have risen in price by more than 1%. This caused an increase in the Nasdaq index and the industry S&P 500 technology (+1.6%). The Dow Jones Industrial Average fell on the back of a collapse in International Business Machines (-4%), as well as JPMorgan Chase & Co (-2.4%), 3M Company (-2.1%) and Home Depot (-2%) . This happened due to various negative corporate information. In particular, IBM said that its new quantum computer will be ready no earlier than 2025. Today, the US will release quarterly reports from Walt Disney and other major corporations.

On Tuesday, oil prices fell for the 2nd day in a row. The negative factor was the message of the American Petroleum Institute on the increase in oil reserves in the US for the week by 1.62 million barrels. In addition, some investors believe that after the European Union and Japan give up Russian hydrocarbons as part of economic sanctions, economic growth in these countries will slow down. This could reduce global demand for oil. However, this morning oil quotes are correcting upwards. U.S. West Texas Intermediate (WTI) is now again trading above the psychological level of $100 per barrel. Prices were supported by a new U.S. forecast. Energy Information Administration (EIA) on US oil production in 2022 of 11.9 million barrels per day (bpd). This is less than the previous forecast of 12 million bpd. In addition, the EIA expects the average price of Brent in the 2nd quarter to be $107 per barrel. Today's data on April inflation in the US may support commodities quotes if consumer price growth exceeds the forecast.