Inflation rates are the key topic of the financial markets today. In the United Kingdom core inflation in April met the forecast of 1.3%, while the broader inflation rate was better than expected at 1.5% YoY.
In the eurozone, the overall inflation rate was also exactly the same as the forecast of 0.6% in April, but core inflation was slightly lower than expected at 0.7%, and that is the more important reading of the two. Sluggish inflation in the European Union could force the ECB to increase its asset purchases to support the economy, which is most likely going to weaken the euro.
Canada will follow suit later today, publishing its own inflation and core inflation rate reports for April.
The last important fundamental report of the day are the minutes of the most recent policy meeting of the Federal Reserve. Investors expect this report to contain the same sort of assurances about a prolonged dovishness from the Fed that we have become accustomed to hearing at each press conference.
Meanwhile, the troubles of cryptocurrencies continue. This asset class already took a beating recently due to Elon Musk’s shenanigans swaying public opinion about cryptocurrencies. Now they were hit again by China, which took measures to ban crypto trading.
The biggest cryptocurrency in the world, Bitcoin, shed over 10% of its value today and dropped below $40,000. It is currently trading some 35% below its historic highs reached earlier this year. Other cryptocurrencies fared similarly.
The problems surrounding cryptocurrencies have affected overall sentiment, contributing to an increase in US Treasury bond yields and dragging US stock indices down.
Oil prices will be in focus later today as US inventories data is published. Moreover, it’s worth noting that there have been rumors that Iran is trying to comply with the UN nuclear deal, which can see the sanctions on its oil exports get lifted, increasing oil supply to the global market and lowering the value of this asset.
