Market Analysis

US inflation data stirs investor sentiments

 

 

FOREX

The US dollar index, a measure of the greenback’s strength versus a basket of other major currencies, continues to hover just above the 95 points mark, moving, for a second consecutive day, within a very tight range. However, the release of US inflation data later today could stir the sentiment of investors. The consensus among analysts is that US core consumer prices in January would have risen by over 5.9%, a number that, if proven right, will be the highest in decades. The greatest risk here is to the upside, as an inflation reading exceeding expectations would increase the likelihood of a 50 basis-point rate hike in March and propel the dollar index to levels above 97 points.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD

Gold prices are down during early Thursday trading, as investors look ahead to the release of US inflation data later in the day. The precious metal’s price has in recent times mirrored that of the US dollar, due to the inverted correlation between the two assets, so gold traders will play close attention to US consumer prices, trying to anticipate the timing and scope of the Federal Reserve’s monetary policy tightening. A core inflation number exceeding the expected 5.9% could force the hand of the Fed into hiking rates by 50bp, a scenario that would support the dollar and end up penalizing gold.

Ricardo Evangelista – Senior Analyst, ActivTrades

 

Source: ActivTrader

 

EUROPEAN SHARES 
European shares were mixed on Thursday, despite a bullish opening, as investors brace for key macro data today. Market sentiment continues to improve across Europe, as solid corporate results boost appetite to riskier assets. Siemens AG, Pernod-Ricard and Société Générale registered some of the top performances today after investors welcomed stronger-than-expected earnings from these companies. While slight corrections are being registered since the market opened, the overall investment landscape remains positive for stocks. Decreasing high yields combined with a declining Euro eases pressure on risky assets and provides an interesting set-up for stocks today. That said, EU stock investors are likely to pay attention to what will happen on the other side of the Atlantic, with the key inflation (CPI) report from the US due later today where a year-on-year figure above 7% is widely expected. This data will provide investors with more clues on how aggressive the Fed could be at its next policy meeting, sparking volatility on both Bond and Stock markets.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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