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The top chart shows the US 10-Year real rate and the middle chart is the EURUSD. The correlation coefficient (cc) between the two series is -61% (bottom indicator). This correlation does not always hold true, but it has been the dominant relationship since March 2022.
Core PCE ticked up to 4.7% y/y from the previous 4.6% y/y. Markets are now betting on 25bps hikes by the Fed for March, May and June, which would take the target rate to the 5.25%-5.50% range. The monthly core PCE printed at 0.6% m/m, greater than the previous 0.4% m/m and larger than the 0.4% consensus. Annualised, this gives a worrying 7.44%, much higher than the Fed 2% average…
Money is seeking the safety of the dollar ahead of the core PCE release. On the hourly chart, the trend following EMAs and the momentum-based stochastic have crossed up. Market participants are worried that inflation remains resilient. Here, the Fed will need to remain hawkish and tighten further, which will negatively affect the present value of risk assets.
The pair is choppy amidst another surge in Japan’s inflation and comments from the BoJ Governor nominee, as markets now brace for the US PCE inflation update
The pair trades with caution as investors appear to be on the sidelines, awaiting today’s accounts of the Fed’s last policy meeting, amidst heightened expectations around the terminal rate
GBPUSD has charted a lower peak followed by a lower trough on the daily time frame (left). This is a defined down trend. Yesterday, GBPUSD appreciated following its flash PMI beats. However, there is no follow through today.
The Canadian trimmed CPI y/y came in at 5.1%, less than the previous 5.3% y/y and below the consensus of 5.2% y/y. This measures consumer inflation but excludes the 40% most volatile items. Core retail sales also declined, printing at -0.6% m/m/ against the -0.1% expected.
The UK services sector expanded in February according to today’s preliminary data, sending the Pound higher
The accounts of this month’s policy decision by Australia’s central bank had a hawkish tone, but the pair is cautious, as markets now brace for a slew of US data and the minutes of the US Fed
The pair is having a bad month and posted another losing week, but managed to avoid new year lows on Friday and now trades with caution ahead of Wednesday’s policy decision by the central bank of New Zealand
FXCM’s USDOLLAR has charted a lower peak followed by a lower trough. This is a defined down trend.
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