CURRENCIES:

US Inflation Preview: Impact on Gold, USD, and Stocks

Event Highlight: The U.S. Bureau of Labor Statistics to release February’s CPI data on March 12, 2024, crucial for investors and the Federal Reserve’s monetary policy.

Headline CPI Forecast: Expected increase of 0.4% for February, driven by higher energy costs, maintaining the annual rate at 3.1%.

Core CPI Forecast: Anticipated to rise by 0.3% month-over-month, with the year-over-year rate potentially decreasing to 3.7% from 3.9%.

Market Volatility: Deviations from market expectations could cause significant asset price movements.

Upside Surprise: Higher-than-expected CPI may indicate persistent inflation, potentially leading to upward adjustments in the Fed’s PCE forecast and fewer rate cuts. This could result in higher bond yields and USD, pressuring gold prices and stocks.

Downside Surprise: Lower-than-forecast CPI might confirm disinflation progress, supporting expectations for multiple rate cuts in 2024. This scenario could decrease yields and the USD, benefiting gold prices and risk assets.

STOCK MARKET:

Market Summary:

Key Data Point: February’s CPI report, crucial for the Federal Reserve’s next interest rate decision, will be closely watched by investors on Tuesday.

Headline Inflation Expectation: Forecasted to be 3.1%, aligning with January’s annual price increase, signaling potential interest rate cuts by the Fed later this year.

Monthly Increase: Consumer prices expected to rise by 0.4%, slightly up from January’s 0.3% increase, mainly driven by higher energy and gasoline prices.

Core Inflation Slowdown: February’s core inflation (excluding food and gas) anticipated to rise by 3.7% year-over-year, down from January’s 3.9%, with a monthly increase expected at 0.3%.

Shelter and Core Services Costs: Despite the expected deceleration in shelter costs, core inflation remains high due to persistent costs in shelter, insurance, and medical care.

OER Inflation: Bank of America predicts a narrowing gap between rent inflation and owners’ equivalent rent (OER) due to an expected slowdown in OER inflation, contrasting with last month’s acceleration.

Fed’s Rate Decision Outlook: Market anticipates the Fed to keep rates unchanged next week, with a significant expectation of rate cuts starting in June, influenced by core CPI outcomes.

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Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

As we approach the week starting February 12, 2024, the financial community is on high alert, gearing up for a series of pivotal economic updates. These reports are crucial as they could significantly influence central bank decisions in the near term, particularly those of the Federal Reserve and the Bank of England. With the backdrop of ongoing global economic adjustments, the forthcoming data releases are set to provide critical insights into the current economic landscape. 

The spotlight this week is on the US and UK, with both nations poised to release vital inflation and GDP figures. For the US, the Consumer Price Index (CPI) data stands out as a key indicator, offering fresh insights into inflation trends and potentially guiding the Federal Reserve’s rate cut expectations. Market participants are keenly awaiting this update, especially after recent labor market data suggested a more robust economic stance than anticipated. 

In the UK, the focus shifts to a comprehensive economic update, including Q4 GDP figures, January inflation data, and labor market statistics. These releases are especially significant as they could hint at whether the UK economy is edging towards a recession, a scenario that would have profound implications for monetary policy and market sentiment. 

Additionally, the Eurozone is not to be overlooked, with its own set of economic indicators due for release. Employment and industrial production figures will be closely watched for signs of economic resilience or weakness, potentially impacting Eurozone GDP revisions and broader market expectations. 

For market analysts and forex traders, these developments are of paramount importance. The US CPI data, alongside the UK’s economic updates, not only shed light on the respective economies’ health but also offer valuable cues for currency market dynamics and trading strategies. Understanding these indicators is essential for navigating the complexities of the global financial markets effectively. 

Key Highlights for the Week: 

• US CPI Data: A critical measure of inflation that could influence Federal Reserve rate cut expectations. 
• UK Economic Updates: Including Q4 GDP, January inflation, and labor market statistics, providing a comprehensive view of the UK’s economic health. 
• Eurozone Indicators: Employment and industrial production figures could signal economic trends and impact GDP revisions. 

As we delve into this significant week, staying informed and agile is crucial for market participants. The upcoming economic indicators and central bank insights will not only enhance understanding of the current economic environment but also assist in refining trading strategies and market approaches. 

Stay Ahead with Insightful Analysis: Keep abreast of these developments with our expert commentary and analysis, ensuring you’re well-equipped to make informed decisions in the ever-evolving financial markets. 

CURRENCIES:

Guidance on US Dollar from US Jobs Report: The upcoming U.S. jobs report will significantly influence the U.S. dollar’s direction, with implications for EUR/USD, USD/JPY, and GBP/USD trading setups.

Sensitivity to Nonfarm Payrolls Data: Financial markets and the U.S. dollar are poised to react to February’s nonfarm payrolls, potentially impacting the Federal Reserve’s easing cycle timing.

Technical Analysis for Major Currency Pairs: The article provides a technical perspective on EUR/USD, USD/JPY, and GBP/USD.

Anticipation of February’s Job Growth: The U.S. Bureau of Labor Statistics is set to release job figures, with expectations of adding 200,000 jobs, following January’s 353,000 job increase. The unemployment rate is projected to remain at 3.7%.

Potential for Surprises: Given recent trends of employment data surpassing estimates, there’s a heightened chance of an unexpected increase in job numbers.

Impact of Hiring Activity on Monetary Policy: A significant outperformance in hiring could delay anticipated central bank easing, adjusting interest rate expectations towards a more hawkish outlook.

Possible Market Reactions: Strong job growth may boost U.S. Treasury yields and help the U.S. dollar recover recent losses. Conversely, a disappointing NFP report could reinforce expectations for imminent Fed rate cuts, potentially lowering bond yields and pressuring the U.S. dollar.

STOCK MARKET:

Market Summary

February Jobs Report Preview: The upcoming release on Friday morning is anticipated to reveal a slowdown in hiring, maintaining the unemployment rate steady.

Expectations: Analysts predict the report will show 200,000 new nonfarm payroll jobs in February, with the unemployment rate unchanged at 3.7%, mirroring January’s figures.

January’s Performance: The U.S. economy saw a significant addition of 353,000 jobs, the highest in a year, while the unemployment rate stayed at 3.7%.

Key Metrics: Wall Street’s focus will be on several figures, including nonfarm payrolls, unemployment rate, average hourly earnings, and average weekly hours worked, comparing them to previous months’ data.

Labor Market Analysis: The report aims to determine if January’s job gains were an anomaly or indicative of the labor market’s strength. Wage growth, in particular, will be scrutinized for inflationary pressures.

Economic Forecasts: Oxford Economics expects a solid but cooler job growth in February and a reversal in the spike of earnings growth from January.

Federal Reserve’s Outlook: Fed Chair Jerome Powell described the labor market as “relatively tight” but noted improving supply and demand balance. The first Fed rate cut is speculated to be in June, with three to four cuts expected throughout the year.

Wage Growth Insights: Recent data presents a mixed view on wage growth, with job changers seeing increased wage gains in February, indicating persistent labor market activity.

Job Market Dynamics: The latest JOLTS report showed a decline in job openings and quits rate, suggesting moderation in wage growth which is crucial for the Fed’s inflation targets.

Market Anticipation: Investors are keenly awaiting the report, with expectations set for the timing and number of Fed rate cuts based on the job market’s performance.

Start your CFD Shares Trading journey with VT Markets now!

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

CURRENCIES:

Euro’s Future Dependent on ECB’s Direction: The outlook for the Euro hinges on the European Central Bank’s (ECB) upcoming guidance, with focus on EUR/USD, EUR/GBP, and EUR/JPY trading strategies.

ECB Meeting Anticipation: The ECB’s meeting on Thursday is expected to maintain interest rates, marking the fourth consecutive time without change. Investors are advised to pay close attention to President Lagarde’s press conference for insights into future monetary policy.

Expected Stance from Lagarde: President Lagarde is anticipated to maintain a neutral position, avoiding any hints that might set unrealistic market expectations.

Growth and Inflation Concerns: Recent disappointing growth data and stalled disinflation progress suggest a cautious approach, despite January’s CPI in the Eurozone exceeding forecasts, indicating persistent inflation, especially in the service sector due to rapid wage growth.

ECB’s Strategy: The ECB is likely to emphasize a data-dependent approach, steering clear of committing to a fixed policy path to manage market expectations.

Euro Trading Scenarios: The euro could strengthen if the ECB suggests delaying easing measures, indicating a hawkish shift in interest rate expectations. Alternatively, hints at possible early rate cuts could negatively impact the euro.

STOCK MARKET:

Stock Market Recovery Led by Powell’s Remarks

Stocks experienced a rebound as Federal Reserve Chair Jerome Powell maintained his stance on potential interest rate cuts within the year.

Key Index Performances

• Dow Jones Industrial Average (^DJI) increased by 0.20%.
• S&P 500 (^GSPC) rose by 0.51%.
• Nasdaq Composite (^IXIC) surged by 0.58%.

Market Dynamics

U.S. stocks, particularly in the technology sector, recovered from a significant sell-off after Powell’s comments on the likelihood of interest rate cuts later in the year.

Powell’s Congressional Testimony

Powell’s upcoming testimony to Congress is anticipated to further influence stock market movements, following a period of losses exacerbated by concerns over major tech companies like Apple and Tesla.

Interest Rate Cut Outlook

Powell indicated to the House Financial Services Committee that rate cuts are probable in 2024, contingent on the economy’s performance aligning with expectations.

Investor Sentiment

Market participants are keenly awaiting more details from Powell over the next two days, looking for any shifts from the Federal Reserve’s consistent message on interest rate policies.

Notable Stock Movements

New York Community Bank (NYCB) saw a dramatic change in its stock price, initially dropping then closing up over 7% after announcing a new CEO and securing a $1 billion investment led by a group including Steven Mnuchin.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.