Market focus may shift to February’s US CPI rates as investors closely monitor inflation data that could reshape expectations for the Federal Reserve’s next policy moves. With geopolitical tensions between the US and Iran still influencing sentiment and recent US employment data hinting at some softening in the labour market, today’s CPI release could become a key driver for currencies, equities, commodities, and crypto markets.
Market focus may shift to February’s US CPI rates
The greenback remained relatively unchanged against its counterparts in the FX market yesterday and during today’s Asian session as market worries for the US war in Iran tended to ease somewhat. There are still conflicting messages from the two sides which maintains the uncertainty at high levels. Today we expect market attention to shift to the release of the US CPI rates for February in the early American session. Please note that the release of the US employment data for the same month last Friday tended to indicate a slack in the US employment market which may have placed some pressure on the Fed to ease its monetary policy rather earlier than later. The release could affect once again shift the market’s expectations for the Fed’s intentions, while at the same time the worries for possibly high oil prices intensifying inflationary pressures in the US economy is looming over the markets.
Xcellence Research Team opinion
Should we see the rates accelerating materially, e may see the market’s expectations for the Fed to keep rates unchanged for longer intensifying and thus providing support for the USD, while at the same time possibly weighing on the US stock markets and gold’s price. On the flip side a possible deceleration of he rates could weigh on the USD and provide support for US equities and gold’s price, both of which have remained relatively muted in the past 24 hours. On a more fundamental level, should market worries about the war in Iran intensifying again, we may see the USD’s safe haven qualities on the forefront again and the greenback gaining some ground, while US equities could be on the retreat.
Rate hike expectations for RBA support AUD
AUD may have been the main market mover in the FX market, getting some support, as the market’s expectations for RBA to tighten its monetary policy seem to be enhanced. The market’s expectations for RBA to tighten its monetary policy next week intensified also by RBA Deputy Governor Hauser stressed that such a scenario hangs in the balance. Currently AUD OIS imply a 72.5% probability for the bank to proceed with a 25 basis points rate hike next Tuesday. Overall we may see more central banks considering a tightening of their monetary policy given the possibly inflationary effect high oil prices may have on their economy.
Xlence Research Team opinion
Should we see the market’s expectations for the bank to hike rates intensifying over the coming days we may see the Aussie getting further support and vice versa.
Oil prices seem to be somewhat steady
Oil prices remained relatively steady as market worries for the supply side of the international oil market tended to ease after IEA’s announcement for a release a record amount oil reserves. Despite the stakes for the oil market lowering with IEA’s announcement uncertainty about the war in Iran remains high. It seems that despite the constant US air strikes, the Iranian side is still holding out and conflicting messages are being sent by both. Thus the situation is still substantially fluid and could re-awake market worries.
Xlence Research Team opinion
Should we see market worries for the supply side of the international oil market re-intensifying, we may see oil prices getting renewed support, while on the other hand should market worries ease further, we may see oil prices retreating
Slight bullish tendencies for Bitcoin
Bitcoin marked slight bullish tendencies yesterday and during today’s Asian session. The crypto market tends to worry a bit about the war in Iran and inflationary pressures in the US economy, yet we highlight a different issue, namely the discussion of the Clarity Act in the US Congress. Further progress on the issue, could re-engage large institutional players in the crypto market.
Xlence Research Team opinion
Should we see further signs of progress being made for the Clarity Act, we may see Bitcoin getting more support and the contrary.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
