Morning Brief – 11th September 2024
Focus on US CPI as Fed Mulls Rate Cut
Today’s big event is the release of the US Consumer Price Index (CPI) report for August. Analysts expect a modest increase of 0.2%, the same as in July.
This key inflation measure will help shape the Federal Reserve’s next move, with a quarter-point rate cut likely at its upcoming policy meeting. However, a lower-than-expected CPI could push the Fed to consider a more aggressive half-point cut.
Key Areas to Watch in the Report:
Rents: Expected to cool after a surge in July, especially in the western US.
Car Insurance: Prices have been rising consistently, but there are signs this could slow down.
Apparel: Clothing prices fell sharply in July, and August could bring further declines.
Market Impact
USD (US Dollar): A weaker-than-expected CPI could push the USD lower against major currencies like the EUR and JPY, as investors anticipate deeper rate cuts.
JPY (Japanese Yen): The JPY surged to its highest level against the USD since January, driven by expectations of further Bank of Japan rate hikes after signals from policymakers.
Market Sentiment and Stock Performance
Asian stocks are under pressure as markets await the US inflation data. The stronger yen is weighing on Japanese exporters, while US stock futures are also down as traders brace for the inflation report.
Brent crude has dipped below $70, further reflecting concerns about global growth.
Key Upcoming Events
Thursday, ECB Rate Decision: Traders are closely watching the European Central Bank’s next move amid ongoing inflation concerns in the Eurozone.
Thursday, US PPI and Jobless Claims: Additional US data releases will provide more insights into economic conditions and labour market strength.
Friday, Eurozone Industrial Production & US Michigan Consumer Sentiment: These reports will shed light on industrial activity in Europe and consumer confidence in the US.
Conclusion:
US CPI Report: Likely to show another 0.2% rise, critical for the Fed's rate decision.
USD Outlook: Weaker CPI could trigger USD selling, while strong data may support the greenback.
JPY Strength: Continued yen gains are expected due to the Bank of Japan's hawkish stance.
ECB Decision: Watch tomorrow’s ECB rate meeting for potential moves on European rates.
DisclaimerThis report is for informational purposes only and does not constitute trading advice. Forex and CFD trading carries a high level of risk and may not be suitable for all investors. Always consult with a financial professional before trading.
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