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Started by PocketOption, Feb 15, 2023, 11:44 am

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Markets Unconvinced by Slight CPI Miss

The inflation numbers in the US generated some volatility in the market before resuming its trajectory. The difference in expectations seemed too little to change the outlook for the Fed’s hiking schedule.


Key Factors for Today

  • Markets focus on monthly CPI flatness

  • Feds persist on persistent inflation

  • ECB’s dove joins hawks

  • RBA’s Lowe says cycle end too early to call

  • EIA report to confirm or contradict API build

Faster Data Were Flat

Yearly CPI inflation for January came in 0.1% higher than markets anticipated, but monthly headline and core inflation figures were flat. The faster data being more critical than last year’s, which could simply be due to rounding, sent markets in different ways as initial moves quickly recoiled. The pound soared to a 2-week high of $1.2270 before returning to $1.2175 for a 0.30% gain. $1.2075 is in close proximity and has firm support.

Fed Officials on Persistent Inflation

Patrick Harker said that the CPI figures noted that inflation is not coming down, more hikes are coming, but the end of the hiking cycle is close. Lorie Logan was another voting member of the FOMC who commented on the tightness of the labour market, saying it needed to be addressed in order to bring inflation down to target. John Williams echoed the sentiment that inflation was too high and the labour market was too tight.

ECB’s Dove Talks Up Rates

Gabriel Makhlouf shot down speculation that the ECB would cut rates later this year, saying that it would raise rates above 3.5%. Noted dove Mario Centeno also said rates would remain above neutral until 2025 or 2026. EUR/USD was widely affected by the dollar. It spiked to $1.08 before recoiling back to $1.0736 for a 0.12% gain. $1.0676 remains critical support.

RBA Unsure About How Far

In his testimony in Parliament, RBA’s Philip Lowe said that he saw some early evidence that demand was moderating. He also insisted that it was too early to forecast an end to the RBA’s hiking cycle. Aussie trades no differently than its peers, with $0.7030 and $0.6922 being the day’s extremes.

Another Build in US Crude Inventories

API reported that weekly crude inventories jumped by 10.5M. This came after the US government announced a further 26M bbl release from the SPR for April through June, ahead of EIA’s report today. WTI fell 2% during Tuesday’s trading but closed 0.44% lower as bulls bought the dip. Below $80/bbl, $77/bbl remains on the radar.

On The Docket

  • UK CPI Inflation

  • South Africa CPI Inflation

  • Spain CPI Inflation

  • US Retail Sales, Manu and Indu Production

  • EIA Crude Oil Stocks Change

Fx 1-Day Relative Performance (USD)

  • Aussie and Kiwi 0.70% and 0.51% lower

  • Pound 0.15% lower, Yen 0.06% up

  • Swissy 0.22% down

  • Euro and loonie 0.18% lower

  • Gold and silver 0.54% and 0.72% down

  • Crude and brent 1.01% and 0.92% lower

  • Natural gas finally falls by 1.09%

The post JASPER’S MARKET SQUAWK 15-02-2023 appeared first on Key To Markets Blog.

Source: JASPER'S MARKET SQUAWK 15-02-2023