Last week, the US saw a significant selloff in mega-cap tech stocks following lower-than-expected inflation data. This led to a shift towards riskier areas of the market, with the Russell 2000 emerging as the top performer. The US Dollar also faced selling pressure after the release of US PPI data, which showed an increase across the board. Market participants were disappointed as hopes of a modest US Dollar recovery were dashed by lower-than-expected consumer sentiment and softer inflation expectations.
Looking ahead, the European Central Bank (ECB) interest rate decision is expected to bring no change, but the bank lending survey may provide insights into the impact of higher rates on the economy. In the UK, inflation data is due, with expectations of a rise in the second half of the year. In the Asia Pacific region, market participants will be closely watching data releases from China, including retail sales, industrial production, and GDP growth data.
In the US, the upcoming week is relatively quiet, with a speech by Fed Chair Powell being the most notable event. The US Dollar Index (DXY) has broken through the psychological level of 105.00 following softer inflation data, and market participants will be monitoring whether this move is sustainable. Continued weakness in the DXY could benefit US Dollar denominated currency pairs and commodities like Gold and Silver.
Overall, market participants will be keeping a close eye on central bank decisions, inflation data, and economic indicators to gauge the direction of the market in the coming weeks. It is essential to stay informed and monitor key events to make informed investment decisions.