Tomorrow’s CPI print will get all the attention as it is the most important piece of HIGH FREQUENCY Data traders and bankers are watching.

We suspect that we have seen peak CPI already and that we will start to see it cool off from here, but we have to wait and see. It seems to us that FX is also in that mode.

A soft read will have an effect on the USD (sell-off) but we suspect the most susceptible market for a corrective move is the BOND MARKET

WEEKLY CHART 10-Year: This has gotten VERY CROWDED and it needs to let some air out. We sold some USDJPY yesterday as a contrarian trade (short 115.65, stop 115.90). We will be quick to cover if INFLATION Comes hot, but will let it ride otherwise.

We suspect FX markets will be quiet today.

We continue to favor a SOFTER USD over-all and will trade with that theme in mind.