Asian equity bourses are trading slightly higher as gains on Wall Street accelerated with NASDAQ led the price action amid tech/growth dip-buying activity also worth noting that U.S. yield curve steepening eased in recent days. However, traders are eyeing U.S. Consumer Price Index data later in the session, and the safe-haven F.X. has seen a lamp bid in, with G10 currency pairs generally range bound.
On the trade front, some narrative is starting to emerge around U.S./China trade relations as U.S. President Joe Biden’s administration is mulling trade actions on China. Earlier, the U.S. Commerce Secretary, according to reports, said they “would not let China off the hook regarding the Phase One trade deal”. This theme is important for the commodity sector and risk assets. Worth keeping an eye on whether this recent trade rhetoric from the U.S. could become real actions against China. For the session ahead, the major event will be the US CPI from January that market has seen implied inflation pricing pushed back for the timing of the year-over-year peak in inflation February, vs January previously. Traders will be paying attention to any signal of sticky inflation ahead of the March FOMC. Parts of the markets consider the prospect for a 50bps lift-off. Worth keeping in mind that some Fed voters are signalling against it for now.
