Markets are relatively quiet today as participants digest yesterday’s risk off flows following the slightly better than expected US CPI and a weak 30-year treasury auction. WTI saw a big bounce trading to $85.37 as geopolitical issues remain in focus. The Lebanese foreign minister warned Israel earlier this morning that any escalation or ground invasion of Gaza could ignite the entire region.

The DXY and Treasury yields remain close to yesterday’s highs. Today’s US data includes Consumer Sentiment and inflation expectations. Keep in mind the geopolitical situation, as an escalation would be considered positive for the USD.

Trading strategies:

  • The best-case scenario for a trade today is a big miss across the board in the US Consumer Sentiment and inflation expectations data.
  • If we see a big miss in the data, expect the USD to weaken against most major markets and XAU (gold), a sell off in USD would inversely affect equities.

Risk Snapshot:

  • Risk appetite is mostly negative with equities and high beta FX down while some geopolitical commodities are higher. Safe havens are mixed with downside in yields and significant moves higher in gold.
  • Keep in mind risk sentiment can be fickle so tracking it throughout the session is key.
  • The biggest driver for risk sentiment this week will be the current moves in Treasury Yields.

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

All trading carries risk.