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  • richard evans

Will US inflation follow the Adobe Digital Price index this time?

Good morning

 

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend. 

 

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

 

This will be until Sunday 31st when we change our clocks in the UK.

 

 

Yesterday was something of a day of consolidation ahead of the all-important US inflation numbers this afternoon.  The sell-off in US dollar has stopped for now.   USDJPY is higher, helped by that slight USD strength but more so by comments from BoJs Ueda who sent JPY lower by saying BoJ need to see more data before deciding on a move away from negative rates.  The annual wage negotiations are pretty key here, they are due to be finished this week so perhaps we’ll have some more information then.  USDJPY currently 147.40, up from yesterdays lows of 146.50.

 

UK unemployment data out this morning showed lower than expected claimants, including a revision lower for last months reading, while wage growth was also lower.  GBP did drop on the release and has continued to do so while I type, GBPUSD moved from 1.2820 to 1.2790 where we are currently, GBPEUR has dipped to 1.1700 having tested the 1.1745 area a couple of times yesterday.

 

BoEs Mann, a known hawk who was one of the members voting for a rate rise at the last meeting gave further hawkish comments yesterday, saying UK are still far away from the 2% inflation target.  She is scheduled to speak again today, expect more of the same from her and while she serves as a very useful reminder that we are nowhere near out of the woods with regards to inflation, we do know her hawkish views are not shared by all members of BoE, as such are likely to have limited market impact. 

 

US inflation numbers are the key today.  Last month we were taken by surprise at higher than expected US inflation numbers and this morning the feeling seems to be the risk are also to the upside.  This has not stopped the idea that Fed will look at rate cuts in June, the numbers today would have to be pretty severe to take that off the table although Powell has made it clear that the Fed are in no rush to cut rates still looking at incoming data before making any decisions.  Pretty binary today I think, higher inflation, stronger US dollar, while lower readings will likely see USD back towards recent lows.  Worth noting that the adobe digitial price index, which regular readers will know can be a decent indicator for US CPI, actually showed declines in February, compared to a rise in January’s data.  Be interesting to see the correlation this time.

 

UK GDP and industrial production data will be released early tomorrow morning, we are hoping to see GDP a touch higher for January, moving away from those disappointing quarters that put the UK in a recession. 

 

I see I was right with the Kate Middleton photo that had created such an absurd amount of backlash.  She has admitted to tinkering with the image as many parents have done when trying to offer a respectable phot of three kids.  Hardly news.  And yet here I am writing about it.

 

The Cheltenham festival begins today, I hope they have better weather than the heavy rain we are seeing here this morning.  I’m no horse racing expert, so don’t expect any tips from me.  My usual practice of just picking the cool names doesn’t normally open to door to riches. 

 

Have a great day

 

-  11.00 BoEs Mann speaks

-  12.30 US CPI

-  18.00 US monthly budget statement

-  07.00 UK GDP, industrial production

 

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