Daily Summary: Lower US CPI drives EURUSD gains

• Wall Street indices traded higher today, supported by lower-than-expected headline CPI reading from the United States. Major benchmarks trade 0.0-0.5% higher

• US headline CPI slowed from 6.0% YoY to 5.0% YoY in March (exp. 5.2% YoY). Core gauge climbed from 5.5% YoY to 5.6% YoY, in-line with market expectations

• Goldman Sachs said after CPI data that it no longer expects the Fed to hike rates at the June meeting. However, GS still expects Fed to hike by 25 basis points in May

• FOMC minutes showed that some Fed officials considered whether to keep rates unchanged amid banking turmoil

• Ultimately, decision to hike by 25 basis points was unanimous

• EURUSD is testing 1.10 mark as the pair caught a bid following US CPI data

• European indices also traded higher today with German DAX adding 0.3%, French CAC40 gaining 0.1% and UK FTSE 100 finishing 0.5% higher

• Japanese machinery orders dropped 4.5% MoM in February (exp. -7.8% MoM)

• ECB Holzmann said that another 50 basis point rate hike remains an option and ECB should accelerate QT starting from July

• Bank of Canada left rates unchanged at 4.50%, in-line with expectations. BoC Governor Macklem said that market expectations of a BoC rate cut in 2023 do not seem like a likely scenario to BoC members

• DOE report pointed to an unexpected 0.6 million barrel build in US oil inventories (exp. -1.3 mb). Meanwhile, gasoline and distillate inventories dropped less than expected

• Gold is trading 0.7% higher on the day, near $2,015 per ounce. Daily high was reached near $2,027 during post-CPI rally

• US natural gas prices drop almost 6% as analysts herald a looming end to heating season in the United States

• CHF and EUR are the best performing major currencies while USD and CAD lag the most

US headline CPI inflation dropped below core inflation in March for the first time since late-2020. Source: Bloomberg, XTB