US equities retreated sharply over night after report of higher than expected consumer inflation data. Both DJIA and S&P 500 seemed to have faced strong resistance from historical highs this week. DJIA closed down -104.9 pts, or -0.58% at 18011.14, comparing to the high made earlier this month at 18288.62. S&P 500 lost -12.92 pts, or -0.61% to close at 2091.5, comparing to corresponding high of 2119.59. Judging from the price actions in dollar, it seems that markets are not buying the speculation that the higher than expected CPI reading would prompt Fed to hike rate in June. Dollar stays general soft with the dollar index struggle around 97 handle.
Technically, the dollar index is staying above 95.48 near term support and thus maintains bullish outlook. Same picture could be seen in dollar pairs in general. That is, EUR/USD is kept below 1.1096 resistance, USD/CAD held above 1.2406. Even USD/JPY is held above 118.67. AUD/USD did breach corresponding level of 0.7912 but that was brief so far. So, we'll still staying generally near term bullish in the greenback but we're also getting additionally cautious on this view.
In Eurozone, it's reported that ECB has asked Greek banks not to increase Greek government bonds and bills holdings. It was quoted that both the ECB and Bank of Greece instructed banks to limit such exposures for prudential reasons. And, further Greek T-bills could not be accepted as collateral.
In Japan, BoJ deputy governor Kikuo Iwata said that the impact of last year's sales tax hike on household spending was "bigger and longer" than expected. And it would be difficult to achieve the 2% inflation target within the 2 year time frame. Nonetheless, he also noted there is no need to change the target as itself would have the effects on inflation expectations.
On the data front, New Zealand trade surplus came in narrower than expected at NZD 50m in February. Japan corporate service price index rose 3.3% yoy in February. German Ifo business climate will be the main focus in European session. Swiss will release UBS consumption indictor and UK will release BBA mortgage approvals. US will release durable goods orders.