US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, justify the market’s fresh fears of skyrocketing inflation ahead while rising for the third consecutive day by the end of Thursday’s US session.

In doing so, the inflation gauge extends the week-start bounce off the lowest levels since April 13 while flashing 2.87% at the latest. The same justifies the market’s risk-off mood and helps the US dollar to regain its charm, which in turn weighs on the riskier assets like commodities and Antipodeans.

Given the firming fears of inflation, traders will closely watch today’s US Nonfarm Payrolls (NFP) for April as the Fed’s latest rejection of 75 basis points (bps) of a rate hike may have assumed no further worsening of employment and price pressures.

“Whilst the Fed is not currently considering a 75bps rate increase, that guidance is based on expectations that the trend increase in monthly nonfarm payrolls will slow and core inflation is stabilizing. But there are no guarantees at all that that will be the case,” said the Australia and New Zealand Banking Group (ANZ).

Also read: US April Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises