Markets are navigating the morning after a material inflation shock, with US September CPI printing at 3.7% year on year with core at 2.6% - both above forecasts - before an overnight reversal stripped much of the dollar's post-CPI gains. The catalyst was a Bloomberg report suggesting China may be routing its US Treasury holdings through Canadian custodians, which sent 10-year yields some 21 basis points below their post-CPI peak and triggered a broad dollar retreat. Asian equities fell sharply, with the Nikkei losing more than 4% and South Korea's Kospi extending losses as the tech hardware selloff deepened, yet gold recovered from its $4,073 low back above $4,145 and the dollar gave back territory it had fought hard for.
The dominant theme today is whether that overnight Treasury rally reflects a genuine repricing of the China-demand story or was simply a one-session correction before the dollar reasserts. Today's answer comes at 13:30 UK time when September PPI and retail sales land simultaneously, with PPI forecast at 0.6% month on month against a prior of 0.4%. Before that, UK August GDP at 06:00 UK time - consensus minus 0.1% - will test the BoE hike narrative and provide the London session's first directional clue for GBP/JPY, which is currently around 209.20.
EUR/USD, sitting on a 0th-percentile CFTC net short of 99,332 contracts, is approaching 1.1200 again with the squeeze mechanics more structurally advanced than at any point this week. USD/CHF, reset by Wednesday's spike to 0.8390, is back below 0.8300 with the 96th-percentile CHF short coil still intact. The full briefing sets out the precise price levels to watch, the exact PPI scenarios and their market implications, and the specific signals that tell you whether today's recovery is real or a trap before the next dollar leg higher.