The market's response to January's CPI, which came in stronger than anticipated, appears to be somewhat exaggerated. Although the dollar surged initially, it has since stabilized. However, the euro and sterling continued to decline, while most other G10 currencies remained steady.

Following significant losses in US equities yesterday, Asia Pacific markets followed suit. Nevertheless, Europe's Stoxx 600 has rebounded by almost 0.5%, recouping roughly half of yesterday's losses, and US index futures are also showing strength.

Despite a considerable increase in inventories according to API, April WTI reached around $78.10 yesterday and is currently consolidating with a firm bias.

Asia Pacific
Japan is expected to report Q4 2023 GDP tomorrow, likely indicating a return to growth after a contraction in Q3.
Meanwhile, the Reserve Bank of Australia is perceived as lagging behind in the monetary easing cycle among G10 countries, with expectations of easing later this year.
Australia's January employment data is due tomorrow, and a weak report could prompt markets to anticipate an earlier rate hike.

The jump in US rates propelled the greenback to nearly JPY150.90, its highest level since November.
The Australian dollar weakened against the greenback and set a new low for the year, although it has stabilized today.

Europe
The eurozone's Q4 2023 GDP confirmed a stagnant quarter, with the economy marginally larger than in 2022.
The UK reported a 0.6% decline in headline inflation, double the expected decrease, keeping the year-over-year rate at 4.0%.

The euro slid below $1.07, while sterling initially rallied before reversing course after the US CPI release. Follow-through selling pushed sterling to around $1.2535.

America
The market reacted dramatically to news of US headline CPI easing to 3.1% year-over-year from 3.4% in December, with the core rate remaining steady at 3.9%. The data, slightly firmer than expected, seemed driven by shelter costs.
Next month's FOMC meeting will provide an update on the Summary of Economic Projections.

The Canadian economy is nearly stagnant, sharply diverging from the US, which contributed to the Loonie's decline, although it fared better than other dollar-bloc currencies and the Scandis amidst the sharp sell-off in US equities.