Following a mixed session in NY which saw cross-asset correlations breakdown, Asia has seen more uniform risk-off price action materialise. AUD and NZD are the main G10 underperformers, while in EM, tech-weakness and local Covid concerns are impacting TWD assets disproportionately (eg. TWSE -5%). This has also had a knock on effect in KRW and Kospi too. More in the EM section.

Ahead, all eyes will be on USD inflation today, where Citi Economics sees risks of a core print that rounds to 0.4%MoM. Elsewhere we look to NOK GDP, GBP GDP, IP and trade and SEK inflation data. EUR IP is also due along with more Fedspeak, where Clarida will be most watched. Over in EM, we await MXN IP, INR IP and CPI and HUF central bank minutes.

Risk faced renewed pressure in Asia, with a more uniform USD bid emerging following the uptick in US yields in the early session. In terms of the underperformers, AUD and NZD are seen most offered in G10 (-0.6%), with EUR and GBP also trading down 0.25% a piece. Inflation concerns and broader risk-off appear to have continued supporting the USD into today’s data:

RBC Capital Markets

Day ahead: US April CPI is pick of the day’s data releases (see below). It is also another busy day for Fed‐speak, with Vice Chair Clarida’s speech to the NABE most notable. We expect Fed speakers to continue to play down the significance of Friday’s weak payrolls report. Early this morning we get the March monthly and Q1 activity data in the UK (see GBP) along with the March trade data and overnight monthly and weekly capital flows data in Japan.

USD: Weaker seasonally adjusted energy prices will help flatter core prices vs headline in today’s April CPI – though we expect both will be rather firm. We look for headline and core prices to rise 0.3% and 0.4% m/m respectively (slightly above consensus). Easy year ago comps will again push the year‐on‐year rates quite a bit higher (headline should hit 3.6% and core should accelerate to 2.4%). But remember, we should not be so easily lulled into the “easy year ago comp” story. The strength of month‐on‐month gains will dictate just how firm those y/y rates become.

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