Market Overview: Spotlight on US CPI Data

Hello, traders! Welcome to a fresh trading week. E8 presents a Market Overview, highlighting essential economic events and insights to guide you in the FX Market. Keep ahead of market movements with our fundamental analysis.

Key Events of the Week Include:

• Australian Business Confidence
• CPI & PPI in the United States
• Labor Market and Economic Activity in the UK
• Industrial & Manufacturing Output in the EU, UK, and US

Monday, March 11th, 2024

The week begins at 8:00 am in Europe with the Swiss Consumer Confidence report. Average consumer confidence levels serve as significant predictors of potential consumer spending.

Throughout the day, the economic calendar appears light, but attention shifts just before midnight, with the release of Japan’s Producer Price Index (PPI) data ten minutes before the day ends.

Speeches:

• 10:30 pm – RBA Sarah Hunter

Tuesday, March 12th, 2024

The day begins at 12:30 am with the NAB Business Confidence data from Australia. In January 2024, Australia’s business confidence index slightly increased to 1, up from a revised zero the previous month, yet remained below the long-term average. This index, derived from a survey, forecasts business conditions for the following month and averages responses on trading, profitability, and employment indices.

An hour before the London session kicks off, the UK will release new labor market statistics, with a particular focus on the Unemployment Rate, followed by Average Earnings and Employment Change.

The week’s most significant event is on Tuesday when the U.S. Bureau of Labor Statistics is set to release the latest CPI data at 12:30 pm. The annual inflation rate in the US dropped to 3.1% in January 2024 from 3.4% in December, exceeding the forecasts of 2.9%. The consensus for the upcoming report remains at 3.1%. These figures are critical as the Federal Reserve plans potential rate cuts by June 2024, according to many analysts, with inflation trends playing a crucial role in this decision. Since June 2023, when inflation notably fell to 3%, close to pre-pandemic and pre-war levels (2-3%), inflation hasn’t surged above 4%, suggesting price stabilization and potentially justifying a rate cut to stimulate the economy. Although some Federal Reserve members maintain a hawkish stance, the CME FedWatch tool currently indicates a 57.3% chance of a rate cut to 5-5.25% at the June 12th, 2024 meeting, with only a 26.1% chance of rates remaining unchanged. Rates staying the same hinge largely on this CPI report; a significant deviation could lead to market volatility. This is why traders will be closely monitoring this Tuesday’s release and subsequent Federal Reserve board members’ statements for clues about the June meeting’s outcome.

Speeches:

• 02:05 pm – BoE Nick Butt
• 04:00 pm – ECB Claudia Buch

Wednesday, March 13th, 2024

The day begins at 7:00 am with updates on economic activity in the UK. Alongside GDP figures, the UK’s Office for National Statistics will also release data on international trade, industrial, and manufacturing production. No significant shifts are anticipated in the country’s economic growth. The British economy experienced a shrink of 0.1% year-over-year in December 2023, a reversal from the 0.2% growth observed in November, and against the expected 0.2% decrease. For January 2024, an expansion of 0.2%, mirroring the November figures, is anticipated.

At 10:00 am, the latest Industrial Production numbers from the Eurozone will be available, reflecting the performance of businesses in the industrial sector, including manufacturing, mining, and utilities.

The remainder of Wednesday is expected to be calm, with no other critical data scheduled on the economic calendar. However, commodity traders will keep an eye out for the regular EIA Weekly Report due at 3:30 pm.

Speeches:

• 08:25 am – ECB Kerstin af Jochnick
• 11:45 am – ECB Piero Cipollone

Thursday, March 14th, 2024

On Thursday, traders will primarily focus on the US once again. At 12:30 pm, the US Bureau will release the country’s Producer Price Index (PPI) data, alongside Retail Sales and Jobless Claims figures.

Although the PPI is not as critical as the CPI data released on Tuesday, changes in producer prices are still significant as producers tend to shift the expenses to consumers, eventually impacting the CPI.

US retail sales decreased by 0.8% month-over-month in January 2024, a decline from a revised 0.4% increase in December and below the anticipated 0.1% decrease. This marked the largest drop in retail sales since March of the previous year, largely due to post-holiday season adjustments and cold weather. The consensus for February stands at an increase of 0.7%, which, if achieved, would indicate a return to normal consumer spending patterns.

Regarding the number of Americans filing for unemployment benefits, the figure was 217K for the week ending March 2, 2024, holding steady from the revised level of the previous week and slightly above the expected 215K. The current market forecast suggests a marginal increase to 218K, indicating a continued tight labor market.

Aside from US data, traders interested in the New Zealand dollar (NZD) might want to pay attention to New Zealand’s PMI index.

Speeches:

• 09:30 am – ECB Frank Elderson
• 12:00 pm – ECB Klaas Knot
• 06:00 pm – ECB Luis de Guindos

Friday, March 15th, 2024

The final day of the week begins at midnight with the release of Consumer Inflation Expectations from Australia. The morning schedule does not feature any data with significant impact.

In the afternoon, attention shifts to the United States for more data releases. At 1:15 pm, the latest figures for industrial and manufacturing production will be disclosed, followed by the release of the Michigan Consumer Sentiment Index just 45 minutes later.

No further data releases are scheduled after the US announcements, concluding the week’s economic calendar.

Speeches:

• 02:30 pm – ECB Philip Lane

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