The US and European futures are trading flat to begin the session on the first trading day of the week. The upward momentum in the US indices has lost some momentum as the US indices reported their first weekly loss last Friday. The S&P 500 reported its largest decline since December last year and fell over 1.11%, while the Nasdaq, which is still the weakest index among the US top three indies, declined 2.41%. The Dow Jones, which is the strongest US index and closed in positive territory on Friday, ended the week with a loss of 0.17%.
Going forward, this week is extremely important for traders. This is because the last two weeks have been about the Fed commentary and the US NFP and traders have been basing their predictions on the US economy. However, what matters the most when it comes to the Fed’s monetary policy and the US economy is the US inflation reading. This week we are going to get that reading, and all eyes will be a laser focus on this data.
The US CPI data will be released on Tuesday and the number will be released at 01:30 GMT. The forecast is for a while the precious reading was at . If the inflation reading shows further improvement and drops further from its previous, then that would be the best news for market players and it is highly likely to bring more bulls to the market. However, if the reading begins to make a U-turn and shows an uptick, we could easily see panic creeping in among traders as they are more than likely to anticipate a lot more hawkish policy from Fed. Under those scenarios, it would be even wrong to think that the terminal—year-end rate is anywhere near the current projection of 5% to 5.25%.
In the UK, we are also going to see a fresh reading of the UK CPI data. The inflation situation in the UK is very different than the US and the BOE has very little room to maneuver.
Geopolitical Tensions
Geopolitical tensions are once again in focus among investors and traders. The US military shot down a fourth unidentified object yesterday. The concern among traders is that this unidentified object could also be the Chinese spy balloon. Only a few days back, the US military shot down a suspected Chinese spy balloon, and the second object, which was similar to the first one, was shot on Friday that was flying over Alaska. Republican Mike Turner said that Congress hadn’t received any briefing or report on the unidentified objects, but the American people deserve to know more.
The fear here is that things can get out of control and tensions could flare up between the two major superpowers which could adversely influence sentiment among traders. Traders are highly likely to keep close taps on this matter as it continues to develop more.
Bitcoin
It seems like that bulls may have lost their appetite once again as the price action shows more weakness. The reason is that there are very small rallies and strong sell-offs. Overall, the price is grinding to the downside and the biggest fear among traders is about SEC pulling the plug on staking. It has already fined Kraken and given a clear warning to others who provided a similar service. It seems more likely that days are over for the unregistered cryptos which were providing staking in the US. The question now for many traders and investors is how badly the industry will be hit if retail traders are barred from staking in the US. Staking has been an important part of the HODL equation and if that becomes unavailable, it may influence many in the industry.
