European Open: There's nerves in the air ahead of US inflation

Asian Indices:

Australia's ASX 200 index fell by -88.7 points (-1.26%) and currently trades at 6,931.00
Japan's Nikkei 225 index has fallen by -425.68 points (-1.51%) and currently trades at 27,820.85
Hong Kong's Hang Seng index has fallen by -40.19 points (-0.18%) and currently trades at 21,828.86
China's A50 Index has risen by 38.2 points (0.28%) and currently trades at 13,916.17

UK and Europe:

UK's FTSE 100 futures are currently down -64 points (-0.86%), the cash market is currently estimated to open at 7,412.21
Euro STOXX 50 futures are currently down -38 points (-1.02%), the cash market is currently estimated to open at 3,686.45
Germany's DAX futures are currently down -135 points (-0.95%), the cash market is currently estimated to open at 14,063.80

US Futures:

DJI futures are currently up 4 points (0.01%)
S&P 500 futures are currently up 13 points (0.11%)
Nasdaq 100 futures are currently up 1.5 points (0.04%)

Asian equity markets tracked Wall Street lower overnight as investors continued to feel the weight of hawkish central banks. But with the ECB meeting now behind us the focus shifts to the US inflation report.

A softer inflation report could also weigh on the dollar for the same reasons equities rally; softer inflation removes some pressure for the Fed to act so aggressively with higher interest rates. We’ve already heard murmurs of the Fed potentially pausing rates around September after a series of 50-bps hikes. And a soft inflation print would certainly help with that case.

Given the large losses sustained this year for Wall Street, a soft CPI print could see indices burst higher like a Jack in the box. Whether that rally is sustained is kind of irrelevant this side of the weekend, but we know a soft print would be music to the ears of equity traders today.

Of course, should inflation unexpectedly rise then it could wreak havoc across markets. Equities could embark upon their next leg lower, and the US dollar catch a fresh bid as the case for aggressive Fed hikes retake centre stage.

EUR/USD (4-hour):

The ECB were not as hawkish as some had hoped which resulted in the worst session for EUR/USD in 4-weeks. A strong inflation report today could tip it over the edge and send it down to 1.0500. Prices are currently hovering just above yesterday’s low in a tight range -which is incidentally near the March 2020 low. Our bias remains bearish below 1.0700 – and for a run down to 1.0530 should inflation come in stronger than expected, although 1.0500 could act as a magnet should the dollar strengthen enough.

Euro explained – a guide to the euro

FTSE 350: 4164.27 (-1.54%) 09 June 2022

62 (17.71%) stocks advanced and 283 (80.86%) declined
8 stocks rose to a new 52-week high, 11 fell to new lows
28.57% of stocks closed above their 200-day average
36.57% of stocks closed above their 50-day average
20.86% of stocks closed above their 20-day average

Outperformers:

+9.43% - Mitie Group PLC (MTO.L)
+3.96% - Melrose Industries PLC (MRON.L)
+3.05% - Spire Healthcare Group PLC (SPI.L)

Underperformers:

-15.04% - CMC Markets PLC (CMCX.L)
-8.64% - Carnival PLC (CCL.L)
-5.62% - Chrysalis Investments Ltd (CHRY.L)

Economic events up next (Times in BST)

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