Markets Seem Shaky Heading into US CPI Release
10 February 2022
Investors seemed nervous on Thursday as another crucial inflation report is due.
The USD ticked lower ahead of the release, pushing the EURUSD pair toward 1.1450, while commodity-linked currencies such as AUD or NZD were rallying again.
US indices gave up some of their yesterday's gains, although so far, it looks like we might see another leg higher as rising rates are being ignored by investors.
Later today, January's US CPI inflation report is due. Inflation is seen rising 0.5% on the month and 7.3% on the year, which would be the highest level in almost 40 years. In addition, core inflation will likely increase further to 5.9% yearly.
"A 25bp Fed rate hike on 16 March is fully discounted as are five hikes by the end of the year," said analysts at ING in a note. The US CPI release will help determine whether the Fed starts off with a 25bp move or 50bp."
Moreover, the usual Thursday's jobless claims will be released. However, they will likely be ignored this time due to the inflation report.
Sterling traders will pay attention to BoE Governor Andrew Bailey's speech, who will likely confirm that the British central bank will raise rates again at next month's meeting.
Some good news came from France, where the recent meeting between Putin and Macron might have produced some de-escalation in the Russia/Ukraine conflict.