Forex Signals Brief May 13: Can US Inflation CPI Ignite Stock Markets Further Today?

Today the US CPI inflation could propel stock markets further to the upside if it leans on the soft side, but a strong CPI would help too. Despite a quiet trading day in North America—with minimal economic data and no scheduled remarks from Federal Reserve officials—U.S. markets experienced a dramatic upswing. President Trump maintained a celebratory tone following the tariff announcement, showing no signs of walking back the decision. Traders seemed to embrace the rally enthusiastically, hinting that risk appetite has returned in force. Over the weekend, the U.S. government announced a significant reduction in tariffs on Chinese goods—from a steep 145% down to 30%—set to last for 90 days. This includes a 20% penalty linked to fentanyl-related imports. The tariff cut triggered a wave of risk-on buying that continued throughout the session, lifting major equity benchmarks sharply higher. The S&P 500 and Nasdaq Composite were among the biggest beneficiaries of the positive trade news, each climbing more than 3% during the day. Although some profit-taking occurred early in the session, late buying activity helped reinforce the day’s strong gains. The broad-based rally reflected growing investor confidence that U.S.-China trade tensions may be easing—at least temporarily. Meanwhile, currency markets remained relatively subdued. The USD/JPY held above 148.00 after breaking that threshold, reflecting ongoing strength in the U.S. dollar. Commodity-linked currencies continued to lose ground against the greenback, though most of the significant moves in forex pairs occurred earlier in the European session. In line with the day’s risk-on sentiment, traditional safe-haven currencies like the Swiss franc and Japanese yen were among the weakest performers. Investors are now more optimistic about the potential for stronger global economic growth, with a particular focus on the thawing relationship between the world’s two largest economies over the next three months. Today’s Market Outlook: May 12–16, 2025 Expectations around U.S. inflation also factored into market sentiment. Forecasts for the core Consumer Price Index (CPI) month-over-month are now at 0.3%, compared to the previous 0.1%. The broader CPI m/m is also expected to rise to 0.3% from -0.1%, while annual CPI remains steady at 2.4%. Last month’s softer CPI readings were driven by declines in volatile sectors like energy, travel, and hospitality—all sensitive to economic uncertainty and policy shifts. Wells Fargo economists noted that seasonal factors and early signs of tariff-related pressure, especially on vehicle prices, could begin pushing core goods inflation higher. However, April’s CPI may not yet reflect the full impact of the most recent tariff adjustments. Last week, markets were slower than what we’ve seen in recent months, with gold retreating as a result, the EUR/USD falling below 1.12, and stock markets continuing upward. The moves weren’t too big, but we opened 37 trading signals in total, finishing the week with 25 winning signals and 12 losing ones. Gold breaks Below the 20 SMA Gold, often a barometer of market caution, saw a sharp correction. After reaching an all-time high of $3,500 per ounce in April, spot prices have dropped by about $140 over two days, settling near $3,300—down nearly 1.9%. This pullback is seen as a shift toward riskier assets amid renewed optimism, especially after news of a new U.S.-UK trade agreement further boosted market morale. USD/JPY Rebounds Continues Amid Dollar Strength The USD/JPY pair remains resilient, pushing above the key 140.00 level and recently reaching 146.00. The yen continues to be sensitive to U.S. dollar strength and global risk dynamics, despite signs of a short-term recovery. USD/JPY – Weekly Chart Cryptocurrency Update Bitcoin Consolidates Above $100,000 Bitcoin saw a robust resurgence, climbing more than 6% to trade above $103,850—its first move above the $100,000 mark since February. The recent gains have been attributed to the bullish sentiment surrounding the U.S.-UK trade deal and renewed optimism for future progress in U.S.-China relations. Bitcoin’s strength stands out, particularly in contrast to corrections in traditional safe-haven assets like gold. BTC /USD – Weekly chart Ethereum Tests MAs after Rebound Following Pectra Upgrade ETHEREUM also staged a notable comeback after a prolonged downward trend from a January high of $3,634 to an April low of $1,475. The successful rollout of the Pectra update, which introduced enhancements to staking and wallet features, has fueled a rally of nearly 20%. The ETH price now sits above $2,200, reversing months of bearish momentum and bolstering the broader crypto recovery. ETH/USD – Weekly Chart