Market sentiment remains cautious as investors await the release of US Consumer Price Index (CPI) later today. European bourses are trading marginally lower, while US equity futures are modestly lower. The US Dollar Index (DXY) is flat, with some incremental firmness seen in recent hours. Meanwhile, the US Dollar/Japanese Yen (USD/JPY) pair briefly topped 159.00 as Takaichi eyes a snap election, leading to some modest strength in the Japanese yen overnight.

In Asia, bond markets saw some pressure, with Japanese Government Bonds (JGBs) and German Bunds (Bunds) experiencing mild selling. However, spot gold is down slightly ahead of the CPI release, while crude oil prices are higher following a Black Sea tanker incident and ongoing focus on Iranian tensions.

Looking ahead at the key events include the release of US Non-Farm Business Index (NFIB) for December, as well as the CPI report. Other notable releases include the Average Weekly Prelim Estimate of ADP and the Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO). Additionally, Fed officials Barkin and Musalem are set to speak. Earnings season will also continue, with reports from JPMorgan Chase, Delta Air Lines, and Bank of New York Mellon due out.