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Zooming in the Global Inflation

Yesterday, despite Friday’s NFP data, and the anticipation for the inflation indicating Consumer Price Index (CPI) scheduled to be released on Thursday this week, markets closed in the green. Major European indices closed slightly higher, with the CAC 40 up 0.43% and the Dax 30 reaching a new record high. US indices also closed in positive territory. The Nasdaq 100 rose 0.2% and the S&P 500 reached a new record high.

Inflation continues to be a trending topic globally. In the UK, shopping has soared, with the British Retail Consortium noting that May sales were 10% higher than May 2019, representing the strongest growth since the pandemic. London – as the US did in April – is slowly awakening from the lockdown´s lethargy and is ready to revert to normality. Britain is scheduled to end its lockdown measures on 21 June, a date that is threatened by the new Indian strain of COVID-19 spreading across the UK Based on the latest volatility, new trading opportunities are being created on the GBP. Yesterday, the pound broke above its recent day lows, with the GBPUSD at 1.41, at the time of writing.

Meanwhile, in the US, the inflation indicating CPI report due on Thursday is stirring up concerns in investors, which may be the reason why 10-year US Treasury yields fell. Traders are awaiting comments from the Federal Reserve (Fed). Last month, the consumer price index rose 4.2% in April compared to its previous year level. The figure is double the target set by the European Central Bank at 2%.

The rise in consumer prices has also been felt in oil, with the price of a barrel increasing from 34 to 70 dollars. The impact of the rise has been reflected in eurozone consumer prices which are up 2% from May last year, reflecting the fastest rise since late 2018. At the time of writing, oil was hovering around $68.65 a barrel.

Between tomorrow and Thursday, ECB representatives will be discussing inflation in the euro area as well as fiscal stimulus policies at a policy meeting.

Today’s market volatility may be increased by the following economic events:
European Union Employment Change q/q
European Union Gross Domestic Product (GDP) q/q
ZEW Germany Economic Sentiment Indicator
South Africa Gross Domestic Product (GDP) q/q

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