Busy Day Ahead With Many Macro Data on Schedule
16 February 2022
Wednesday could bring a lot of volatility again as investors will focus on the Ukraine-Russia developing situation, but several important macro releases are also on the agenda.
The UK CPI inflation has already been released, rising further to 5.5% year-on-year, likely confirming the next rate hike in March at the BoE's next meeting. The core inflation accelerated from 4.2% to 4.4% yearly.
During the EU session, traders will pay attention to industrial production from the euro bloc, which is seen falling sharply monthly but improving on a yearly basis.
Later today, US import and export prices are due, but more importantly, retail sales for January are on the agenda. Market participants forecast a notable improvement from December, one of the weakest months overall, despite the Christmas holiday season. Moreover, capacity utilization and industrial production will be released.
Canadian inflation figures are due today, too, seen rising further, likely prompting some volatility in the USDCAD pair as traders might start pricing in some rate hikes by the Bank of Canada.
The day's headline event could be the FOMC minutes from the recent Fed meeting. The minutes are expected to confirm the hawkish narrative among FOMC members as the Fed stands ready to raise rates in March.
A debate among Fed officials on how aggressively the central bank should hike interest rates also continues. St. Louis Fed President James Bullard on Monday repeated calls to speed up the pace of Fed rate hikes, but some of his colleagues are less keen to commit to a half-point increase or were even concerned it could cause trouble.
Investors currently price in a 60% chance of a 50 bps rate hike in March. However, once the situation regarding Russia/Ukraine cools down, we might see the odds heading toward 100% as inflation remains elevated in the US.