What happened in the US session?
US CPI m/m at 0.4% met forecasts, with 6.0% y/y (as predicted) but below the previous 6.4%. Core CPI m/m was up 0.5% (0.4% forecast). A limited impact on USD is expected as figures mostly align with expectations, but inflation remains a crucial concern for the economy.
What does it mean for the Asian Session?
Lingering concerns about contagion risks from the US banking sector are likely to cap the recovery of risky assets. If history repeats, more banks, even outside the US, could announce troubles. A ‘safe-haven’ run to the Swiss Franc, Japanese Yen and Gold is highly probable in this scenario.
The Dollar Index (DXY)
Key news events today
Core PPI m/m
Core Retail Sales m/m
Empire State Manufacturing Index
PPI m/m
What can we expect from DXY today?
The upcoming data releases may hurt the USD, as the Core PPI m/m is forecasted to be 0.4%, down from the previous month’s reading of 0.5%. Similarly, the Core Retail Sales m/m is predicted to be -0.1%, lower than the previous month’s reading of 2.3%. The Empire State Manufacturing Index is expected to be -7.9, worse than the last reading of -5.8%.
Central Bank Notes:
- The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%
- The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals
- A majority vote from the Committee supported the decision to raise the target range
- Next meeting is on 23 March 2023
Next 24 Hours Bias
Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
The impact of the US CPI data release on gold prices will likely be mixed. An inflation rise can increase gold demand as a safe-haven investment. But, the limited impact on USD from the latest CPI release may dampen gold prices in the short term since a weaker dollar can attract foreign investors’ demand for the precious metal.
Next 24 Hours Bias
Mixed
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
No major news events for AUD today, so price direction is likely to draw from previously released data. Westpac Consumer Sentiment is unchanged at 0.0%, and NAB Business Confidence declined to -4, indicating less confidence in the economy, potentially negatively impacting demand for AUD.
Central Bank Notes:
- Cash rate raised by 25 basis points to 3.60%.
- Board prioritises returning inflation to target, with a likely need for further monetary policy tightening.
- Board to closely monitor the global economy, household spending trends, inflation and labour market outlook when assessing interest rate increases.
- Next meeting on 4 April 2023
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The NZD’s current account balance was -9.46B, worse than the forecasted -7.64B but better than the previous -10.21B. The persistent negative balance suggests weaker economic performance and may lead to a decline in NZD’s value.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production.
- Next meeting is on 5 April 2023
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The Bank of Japan announced that they would continue their ultra-dovish policy stance and quantitative easing measures to maintain their inflation target of 2 per cent. This decision was expected and is intended to ensure stability in the economy.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 27 April 2023
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
Positive German WPI (expected 0.3%, previous 0.2%) and Industrial Production data (expected 0.3%, previous -1.1%) may boost the Euro. A decrease in the Italian Quarterly Unemployment Rate (expected 7.8%, previous 7.9%) could also support the currency. However, the French Final CPI (expected 0.9%, previous 0.9%) is not likely to significantly impact the Euro.
Central Bank Notes:
- Main Refinancing Rate is currently at 3.00%
- ECB Governing Council to continue raising interest rates and reducing holdings of securities
- Future policy decisions to be data-dependent
- Next meeting on 16 March 2023
Next 24 Hours Bias
Weak Bullish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
No major news event is expected to affect the CHF currency today. The previously released PPI m/m data may determine the price direction bias, with the actual data showing a negative reading of -0.2% (expected 0.5%, previous 0.7%).
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
Annual Budget Release
What can we expect from GBP today?
A positive release in the UK’s Annual Budget Release showing strong economic growth and fiscal discipline can boost GBP. In contrast, a negative release with higher taxes or lower growth projections can cause a drop in the British Pound.
Central Bank Notes:
- MPC voted to increase Bank Rate by 0.5 percentage points to 4%
- Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
- MPC’s updated projections show CPI inflation falling back sharply from its current level
- Next meeting on 23 March 2023
Next 24 Hours Bias
Mixed
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
Canadian Housing Starts are forecasted to increase from 215K to 222K. This could positively impact the CAD due to job creation and economic growth.
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 12 April 2023
Next 24 Hours Bias
Weak Bullish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
The projected decrease of 0.2M barrels (previous -1.7M) in Crude Oil Inventories may cause a rise in oil prices if actual data release shows a more significant reduction. In contrast, a minor reduction may result in muted impact.
Next 24 Hours Bias
Weak Bullish
