Markets Waver as UK Inflation Cools – Focus Turns to U.S. Data
Markets opened Wednesday with cooler-than-expected UK inflation data and ahead of key U.S. economic releases. Commodities are holding firm, while currency markets reflect shifting sentiment as investors weigh central bank signals, inflation trends, and geopolitical developments. Here’s what’s moving markets today.
Key Data Out Today – Wednesday, March 26
- UK Inflation: All eyes were on the February CPI release out of the UK. Inflation cooled to 2.8% YoY (vs. 2.9% expected), with core CPI slowing to 3.5% from 3.7%. The monthly figures also disappointed, adding pressure to the pound and increasing the likelihood of a dovish shift from the Bank of England.
- UK Retail Price Index: RPI also softened, rising 3.4% YoY (below expectations of 3.6%), suggesting broader disinflation trends.
- U.S. Durable Goods Orders (February): Markets await this key indicator of industrial activity at 12:30 GMT. The headline number is expected to decline, while ex-transportation and core capital goods could give clearer signs on business investment trends.
- Speeches: ECB’s Villeroy and Cipollone, as well as Fed’s Kashkari and Musalem, are scheduled to speak today. Any dovish or hawkish tones will be watched closely as markets price the next rate path.
Commodities
- Oil: Crude prices are ticking higher, with WTI at $69.33 (+0.48%) and Brent at $73.33 (+0.43%). Supply risks from Venezuela and Iran, along with surprise U.S. inventory draws, are helping prices rebound despite a poor start to the year. Still, both benchmarks are down over 14% YoY.
- Gold & Silver: Gold remains resilient, trading at $3,023.26 (+0.08%), continuing to benefit from investor hedging against macro uncertainty and strong YTD gains (+15.2%). Silver is slightly softer at $33.63 (-0.12%) but still up over 36% YoY.
Currency Movements
- EUR/USD is slightly firmer at 1.0799 (+0.07%) as traders await more from the ECB. The euro is holding up despite weak eurozone data earlier this week, but broader risk sentiment is weighing.
- GBP/USD slipped to 1.2908 (-0.27%) after softer inflation data. The drop puts further pressure on the BoE to consider a rate cut, weakening sterling against most peers.
- AUD/USD is up at 0.6322 (+0.30%) and NZD/USD follows suit at 0.5755 (+0.30%), both benefiting from risk-on flows and mild USD weakness in Asia-Pacific trading.
- USD/JPY climbed to 150.08 (+0.11%), continuing its upward trend on yield differentials. The yen remains under pressure as the BoJ holds firm on ultra-loose policy.
- USD/CNY rose to 7.2721 (+0.09%), reflecting cautious sentiment in Chinese markets amid lackluster economic momentum and policy uncertainty.
- USD/CHF edged up to 0.8833 (+0.05%). The Swiss franc remains a defensive play, though dollar strength is limiting upside.
- USD/CAD dipped to 1.4252 (-0.18%), supported by rising oil prices and a broader pullback in USD strength.
- USD/MXN moved higher to 20.1045 (+0.26%), reversing recent peso gains as profit-taking sets in after a strong March rally.
- USD/INR eased to 85.49 (-0.10%), with the rupee gaining ground on strong equity inflows and weaker U.S. confidence data.
Market Outlook
With UK inflation surprising to the downside and crude markets firming, today’s trading landscape is dominated by anticipation. Durable goods data in the U.S. could swing sentiment if it shows softness, potentially reinforcing bets on Fed easing later this year. Currency traders are closely watching central bank speakers for any subtle shifts in tone, especially as inflation data becomes more mixed globally.
Markets are walking a fine line—balancing easing inflation in the UK, uncertain U.S. growth signals, and fragile geopolitics. Expect short-term volatility, especially in FX pairs tied to commodity-linked and high-beta currencies.