GBPUSD pares US inflation-linked gains on mixed UK data

Markets slipped into consolidation mode during early Friday, after witnessing the US inflation-led volatility the previous day. The US Dollar, however, failed to improve as softer CPI renewed policy pivot talks and the Fedspeak favored the same.

A rebound in yields, however, challenged the risk-on mood and joined mixed headlines from China to weigh on Antipodeans. The same couldn’t stop USDJPY from declining further on more chatters of BOJ’s policy normalization.

NZDUSD dropped the most as RBNZ hawks also retreat amid fears of the Fed’s easy rate hikes while GBPUSD failed to cheer better-than-forecast data.

Gold also pares some of the recent gains while WTI stays on the front foot amid expectations of more demand due to China's unlock and a record trade volume in 2022.

BTCUSD bulls take a breather after cheering the biggest daily jump in two months whereas ETHUSD retreats from a nine-week high.

Following are the latest moves of the key assets:

• Brent oil prints five-day uptrend as bulls poke $84.00.
• Gold retreats from eight-month high as buyers struggle around $1,900.
• USD Index fails to improve from the seven-month low, taking rounds to 102.20 by the press time.
• Wall Street closed in the green but stocks in the Asia-Pacific region traded mixed. However, equities in Europe and the UK are mildly bid at the latest.
• BTCUSD and ETHUSD print mild losses around the multi-day high, close to $18,800 and $1,400 as we write.

Markets in consolidation mode

US inflation matched the anticipated softening on YoY and marked the first monthly contraction since June 2020, which in turn pushed Fed policymakers to accept softer rate hike demand. However, policy pivot is far from the table and hence allowed the US Dollar to lick inflation-led wounds near a seven-month low.

USDPY dropped the most among major currencies as BOJ-induced speculations gain momentum. GBPUSD, on the other hand, couldn’t cheer the monthly data as statistics came in mixed while improving versus downbeat forecasts.

China's trade balance improved but mixed import-export figures and fears that 2023 will be a dismal year for China’s international trade exert downside pressure on antipodeans. Among them, NZDUSD dropped heavily amid fears that RBNZ will have to shift gears.

Gold struggles to remain beyond $1,900 even as Brent oil prints a five-day uptrend amid hopes of more energy demand and a supply crunch.

Elsewhere, hopes of easing inflation and favor to riskier assets joined the softer US Dollar to keep Crypto bulls hopeful despite trimming some of the latest gains during Friday’s sluggish session.

• Strong buy: GBPUSD
• Strong sell: ETHUSD, USDJPY
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

More proof of inflation softening awaited

US consumer sentiment and inflation expectations will decorate today’s economic calendar and will be watched closely for confirmation of the Fed’s easy money policies in 2023. It’s worth observing that the Fed policymakers aren’t yet favoring the pause to rate hikes and hence the incoming data, as well as speeches from the policymakers will be crucial for more clues.

May the trading luck be with you!