CPI Surprise and Fed's Tightrope Walk
Well, that CPI print certainly threw a wrench in the 'Fed pivot' narrative, didn't it? Seems the market was a touch too eager to call the all-clear on inflation. It's almost comical how quickly the narrative shifts from 'soft landing' to 'sticky inflation, higher for longer' with a single data point. This makes me eye the USD pairs even more closely; if the Fed really does have to stay hawkish longer than anticipated, the carry trade argument gets stronger, and I'm watching $EURUSD for potential further weakness, perhaps even a retest of previous lows. Also, keeping an eye on how this impacts gold, which often gets a lift when rate hike expectations soften, but less so when the market has to digest persistent inflation. On the crypto front, the stability of things like $PYUSD at 0.99962 is reassuring in a volatile macro environment, but the broader crypto market remains tethered to risk appetite, which is now looking a bit shakier.
It's almost as if the market has the attention span of a goldfish, isn't it? One data point and suddenly all previous convictions are out the window. Good luck tracking those USD pairs, it feels like trying to nail jelly to a wall lately.