Daily market analysis

Forex Market Analysis: USD Strength Surges, Inflation Anticipation, S&P 500 Hits Record Highs

February 12, 2024
CURRENCIES:
  • Gold Price Trends: Gold prices declined due to an increase in U.S. Treasury yields and a stronger U.S. dollar.
  • Currency Market Movements: The EUR/USD and GBP/USD experienced slight drops but remained above critical technical levels.
  • Anticipation of U.S. Inflation Data: The upcoming U.S. inflation report is expected to significantly influence market volatility in the following week.
  • Stock Market Performance: Despite the pressure from rising bond yields, U.S. stocks, including the S&P 500 and Nasdaq 100, achieved record highs.
  • U.S. Dollar Strength: The U.S. dollar has been on an upward trend for four weeks, affecting currency pairs like EUR/USD, GBP/USD, and leading to a notable rally in USD/JPY.
  • Potential Market Reactions to CPI Report: The January inflation data release could lead to substantial market fluctuations, with traders advised to brace for potential sharp price movements.
  • Impact of Inflation on Markets: An inflation rate exceeding expectations could boost U.S. yields and the dollar but negatively affect stocks and gold. Conversely, lower-than-expected inflation figures might decrease yields, weaken the dollar, and support equities and gold prices in the short term.
STOCK MARKET:
  • Economic data: New York Fed one-year inflation expectations, January (3.01% previously)
  • Earnings: Avis Budget Group (CAR), Monday.com (MNDY), Waste Management (WM), Zoominfo Technologies (ZI)
  • Key Market Indicators: Inflation, retail sales, and corporate earnings are pivotal factors for the market this week.
  • S&P 500 Milestone: The S&P 500 surpassed the 5,000 mark for the first time, continuing a positive trend seen in recent weeks.
  • Corporate Earnings Reports: About 15% of S&P 500 companies, including John Deere, Coinbase, Airbnb, and Shopify, are scheduled to report their earnings.
  • Inflation Expectations: The Consumer Price Index (CPI) for January is anticipated, with an expected annual gain of 2.9%, signaling a decrease from December’s 3.4%.
  • Core Inflation Forecast: Excluding food and energy, core inflation is projected to have risen by 3.7% year-over-year, with a monthly increase of 0.3%.
  • Consumer Spending Outlook: January’s retail sales report is awaited, with an expected 0.2% decline from the previous month, influenced by seasonal factors and weather disruptions.
  • Automotive Industry Earnings: Stellantis is set to report its earnings, with attention on its performance and electric vehicle (EV) strategy following positive surprises from Ford and GM.
  • Earnings Performance: So far, 75% of S&P 500 companies have reported earnings, showing a trend towards the second consecutive quarter of earnings growth.
  • Analyst Insights: High earnings beat rates among U.S. companies suggest strong market performance, with expectations of continued earnings growth over the next two years.

Styliana Charalambous

Market Analyst

My name is Styliana Charalambous, possessing a professional qualification as a Chartered Certified Accountant and a Bachelor’s Degree in Accounting and Finance. Highly motivated financial analyst with expertise in audit and investment strategies. I have several years of experience in the finance industry, as an audit supervisor at KPMG and the Head of Investment & Market Research in a multinational Fintech company.

Passionate about personal finance, investing, and creating finance content on social media. Lecturer in Accounting & Finance at Canterbury Christ Church University. I am the Founder and CEO of Selfmade Academy, an organization that helps thousands of students worldwide to plan for their financial future and make smart decisions about their money.

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