Asian equities could trade firmer after a risk-on day on Wall Street, with traders positioning for today’s key risk event, the US Consumer Price Index. Traders are expecting a softer reading once again, and yesterday’s price action on equities, USD and US yields also shows that a dovish reaction could be preferred in case of a miss in expectations. A strong reading could also cause a deleveraging effect that might send equities down and support the USD and US yields. Worth mentioning that risk-on price action was noticed yesterday after some inflation-easing data from the Fed, where the NY Fed’s November Consumer Survey saw inflation expectation drops in the 1, 3, and 5-year ahead horizons.
It is also worth noting that this week will be busy with major central bank decisions on the radar. The Fed, BoE and ECB will be releasing monetary policy decisions before the year-end holidays. Technical trades could also weigh heavily on short-term price action mixing the risk events digestion ahead of Friday’s Quadruple Witching, where multiple index futures contracts and options expire.
