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Markets Awaiting Inflationary Cues From UMich, PPI

  • Currency markets are generally extending the intraday trends that bedded in ahead of the Thursday close, with EUR and GBP extending their bounce against the greenback. EUR/USD printed an overnight high at 1.0588, just shy of the multi-month best printed on Monday. This reinforces the importance of 1.0595 as resistance going forward, with today's US data of particular importance.
  • Equities futures are mixed, with US indices a touch firmer, while Europe looks weak in comparison. The e-mini S&P is continuing to edge back through the Monday/Tuesday losses, but a more significant rally will be needed to take out Tuesday's 4014.75 and Monday's 4075.75.
  • On an intraday basis, JPY and GBP are the firmest in G10, while CAD and AUD are among the poorest performers. Nonetheless, ranges remain tight, with conviction limited ahead of the raft of CB meetings next week.
  • The prelim read for December Uni of Michigan confidence is due, with inflation expectations seen holding at 4.9% and 3.0% on the one- and 5-10yr horizon respectively and markets will be looking to see whether slowdown in the Y/Y rate of CPI has filtered into inflationary expectations. US PPI is also due, adding to the inflationary picture ahead of next week's CPI release and the FOMC meeting.

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