From the moment the U.S. Consumer Price Index (CPI) surged to record highs, the global market reacted with mixed signals. The OCBC’s Christopher Wong noted that higher yields in U.S. Treasury yields, along with renewed Fed hawkish expectations, helped stabilize the U.S. Dollar (USD), which had previously been seen as volatile. However, the recent surge in CPI data did not yet signal a broad inflation breakout, leaving uncertainty about whether USD gains would persist. Wong emphasized that while USD supports remain strong due to elevated oil prices and risk sentiment, the CPI mix remains cautious. He pointed to potential upside for the USD if there are further surprises in inflation or if oil prices continue to rise. The chart shows that the USD has been supported at key levels, including resistance near 98.70 and 99 levels, with support at 98.10 and 97.50/60 levels. On the data docket, PPI was reported to be up next. Personally, I think the current situation reflects a complex interplay between economic fundamentals and market expectations, where both positive and negative factors contribute to the resilience or weakness of the USD.
