Pips for Breakfast: May 12, 2026

Alphabet is spending $190 billion on AI while the US inflation forecast is looking stickier than a movie theater floor.

On This Day

In 2021, the US CPI data came in so hot it practically melted the terminals. The 4.2% print was the highest in over a decade at the time, and it turned the word "transitory" into a very expensive punchline for the Fed.

The Play

The CPI Squeeze: If the core CPI m/m beats the 0.3% forecast, expect USD/JPY to push higher. This is especially true as Alphabet’s massive yen bond sale creates a unique vacuum in JPY demand. If the number misses, EUR/USD is the relief trade of choice.

AUD/USD Fade: Australian business confidence is currently sitting at -24. That is not a typo. It means Australian CEOs are about as optimistic as a captain on a sinking ship. If the Wage Price Index at 21:30 UTC doesn't show a massive spike, the Aussie is the cleanest risk-off play on the board.

What's on Deck

USD CPI (08:30 UTC): This is the only number that matters until the Fed vote. The forecast is 3.7% y/y. If it hits 4.0%, the dollar will likely act like it just drank a gallon of cold brew.

Fed Chair Nomination (12:00 UTC): It's expected to pass. Markets hate surprises here. If there is any friction in the vote, volatility will spike in USD/CHF as traders run for the exits.

AUD Wage Price Index (21:30 UTC): This is the last piece of the puzzle for the RBA. They need a reason to be hawkish, but the data usually prefers to remain stubbornly mediocre.

The Data Behind the Patterns View Packages →

Quick Pips

Alphabet's Yen Bond: The tech giant is looking for $190 billion to fund its AI dreams. Japan is basically becoming the world's most expensive server farm. Watch for JPY cross volatility as the deal prices.

Oil and Iran: Pessimism regarding US-Iran relations is keeping a floor under crude. This usually keeps USD/CAD in a tight range, regardless of how many times the Bank of Canada tries to sound interesting.

Bessent and Katayama: They talked for two hours about critical minerals and AI. Usually, when two high-level officials talk for that long, they've agreed to agree on absolutely nothing.

Why Your P&L Cares

The "Sell in May" mantra is often just an excuse for fund managers to start their summer holidays early. However, when you layer a 3.7% inflation forecast over a period of historical equity weakness, the "risk-off" flow becomes more than just a seasonal myth.

Historically, May 12 has been a day where the US dollar likes to remind everyone who is boss. If the CPI print today confirms that inflation is indeed a permanent resident rather than a houseguest, those "Sell in May" flows will turn into a full-on stampede toward the greenback.

Alphabet’s move into the yen market is the wild card. A $190 billion bond sale is large enough to move the needle on JPY liquidity. If you are trading EUR/JPY or GBP/JPY today, you aren't just trading interest rates. You are trading Google's ability to build more data centers.

The Bottom Line

Today is about whether the Fed can actually stay on its path or if inflation is about to ruin the party again. Watch the 08:30 UTC print like your account depends on it, because it probably does. Now go make some pips. You’re fed.