Today kicks off a round of high-impact data releases with US CPI data, with stocks rising on expectations of a strong decline and a pause in rate hikes tomorrow.

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  1. The closely watched US CPI (inflation) data will be released today. The annualized rate is expected to fall from 4.9% to 4.1%, finally opening a meaningful positive real interest rate in the US if the decline is in line with expectations. The Federal Reserve meets tomorrow and is expected not to raise rates for the first time in a year.
  2. Global stock markets are up, partly on expectations of lower US inflation and no rate hike tomorrow. US and Japanese stock markets rose strongly to hit new long-term highs, represented primarily by the NASDAQ 100 index and the Nikkei 225 indexwith both gaining more than 1.5% on the day.
  3. The People’s Bank of China surprisingly cut its 7-day reverse repo rate from 2.0% to 1.9%, likely adding to the generally bullish sentiment in equity markets.
  4. The 3 major central banks – the US Fed, the ECB and the BoJ – will be holding policy meetings this week, so we can expect volatility in the forex market starting later today.
  5. In the forex market, the US dollar is falling again. During the Asian session, the euro was the strongest currency and the US dollar the weakest. Trend traders will likely still look for long trades in USD/JPY currency pair that recently hit a new 6-month high.
  6. The Turkish lira fell to another record low yesterday after undergoing fresh weakness since President Erdogan’s election victory began to look likely.
  7. Later today, figures will be released on the change in the number of UK claimants (jobless claims).

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