Global FX Market Summary: EUR,USD, CPI March 11th,2024

Dmitry Chernovolov Market Analyst

The Euro stalls before key US inflation data, while the Dollar finds support as investors await clues on future Fed rate cuts. The US CPI report is expected to show mixed signals on inflation, keeping markets volatile until Tuesday’s release. Gold remains near record highs on a weaker Dollar and inflation expectations.

EUR/USD Loses Momentum Ahead of US CPI: The Euro (EUR) is trading around 1.0940 on Monday, lacking its own positive driver (self-momentum) due to expectations of an upcoming economic slowdown in the Eurozone. This sluggishness comes ahead of a key data release on Tuesday – the US Consumer Price Index (CPI). The Eurozone faces potential headwinds as its economy is expected to weaken in the coming months.

 

US Dollar Finds Support Before Inflation Data: The US Dollar (USD) is finding some support on Monday ahead of the crucial US CPI data release scheduled for Tuesday. Investors are cautiously waiting for this inflation report to gauge the pace of future interest rate cuts by the Federal Reserve. A lower-than-expected inflation reading could strengthen the case for an earlier rate cut by the Fed, potentially weakening the USD. Conversely, a higher inflation reading could lead to expectations of a slower pace of rate cuts, which could lend support to the USD.

 

US CPI Preview: Mixed Signals on Inflation: The upcoming US CPI report for February is expected to show mixed signals on inflation. Headline inflation is forecast to increase slightly to 0.4% MoM (Month-over-Month) compared to 0.3% previously. However, it is expected to remain steady at 3.1% YoY (Year-over-Year). Core CPI, which excludes volatile food and energy prices, is forecast to decline to 0.3% MoM, down from 0.4% in January. On a YoY basis, core CPI is expected to ease to 3.7% from 3.9% previously. These mixed signals will likely cause market volatility until the data is released on Tuesday.

 

Gold Holds Near Record Highs: Gold prices are hovering near record highs on Monday, trading around $2,184 per troy ounce. This strength is due to a weaker US Dollar and expectations of continued inflation. A weaker USD makes gold more affordable for buyers using other currencies. Additionally, if inflation remains elevated, gold is seen as a hedge against inflation because its value tends to hold steady over time. Investors are keeping a close eye on the US CPI data release on Tuesday, as it could influence the future trajectory of inflation and gold prices.

 

Economic Calendar Highlights

  • EU
    • Harmonized Index of Consumer Prices (YoY) on 03/12/2024 (HIGH Impact)
    • EcoFin Meeting on 03/12/2024 (MEDIUM Impact)
    • Industrial Production s.a. (MoM) on 03/13/2024 (MEDIUM Impact)
    • ECB’s Cipollone speech on 03/13/2024 (MEDIUM Impact)
  • US
    • Consumer Price Index ex Food & Energy (MoM) on 03/12/2024 (HIGH Impact)
    • Consumer Price Index ex Food & Energy (YoY) on 03/12/2024 (HIGH Impact)
    • Consumer Price Index (YoY) on 03/12/2024 (HIGH Impact)
    • Monthly Budget Statement on 03/12/2024 (MEDIUM Impact)
  • UK
    • ILO Unemployment Rate (3M) on 03/12/2024 (HIGH Impact)
    • Employment Change on 03/12/2024 (HIGH Impact)
    • Claimant Count Change on 03/12/2024 (HIGH Impact)
    • Industrial Production (MoM) on 03/13/2024 (MEDIUM Impact)
    • Manufacturing Production (MoM) on 03/13/2024 (MEDIUM Impact)
    • Gross Domestic Product (MoM) on 03/13/2024 (MEDIUM Impact)

 

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