Global FX Market Summary: Euro, Gold, CPI, Oil March 13th,2024

EUR/USD Stalemate amid Risk-Off Sentiment: Despite prevailing risk-off sentiments, the Euro (EUR) maintained stability against the US Dollar (USD) on Wednesday. This defiance is attributed to comments from a key European Central Bank (ECB) policymaker hinting at possible interest rate cuts in June. Such dovish tones, compared to the Federal Reserve, could make the Euro relatively more appealing. Moreover, while recent US inflation data exceeded targets, the pace of increase was slower than expected, contributing to the subdued performance of the US Dollar.

 

Gold Price Holds Firm as Dollar Weakens, Focus on US Retail Sales: Gold (XAU/USD) saw marginal gains in the European session on Wednesday amidst uncertainties surrounding the Federal Reserve’s (Fed) monetary policies. Initially, hotter-than-expected US inflation data raised speculations of a persistently hawkish stance by the Fed, potentially dampening Gold prices. However, the recent softening of the US Dollar mitigated these concerns, providing some support to Gold prices. The weakening Dollar makes Gold relatively cheaper for investors holding other currencies, possibly revitalizing buying interest. Investors are now eagerly awaiting US Retail Sales data for insights into consumer spending, a key factor influencing inflation.

 

US CPI Surprise Dims Prospects of Early Fed Rate Cut: The latest US Consumer Price Index (CPI) data, released on Tuesday, exceeded market expectations, signaling heightened inflationary pressures in the US economy. This unexpected surge casts doubt on earlier anticipations of a Federal Reserve (Fed) rate cut in June. The Fed’s vigilance against inflation is evident, and the likelihood of a near-term rate cut has dwindled. Market sentiment now suggests a prolonged maintenance of the current hawkish stance by the Fed to effectively manage inflation.

 

Oil Prices Rise on Inventory Decline and Geopolitical Tensions: West Texas Intermediate (WTI) crude oil prices climbed about 1.46% on Wednesday, rebounding from daily lows. This upward trend can be attributed to two main factors. Firstly, the US Energy Information Administration (EIA) reported a larger-than-expected decline in US crude oil inventories, hinting at potential supply constraints and subsequent price hikes. Secondly, ongoing geopolitical tensions, such as the Ukrainian attack on a Russian oil refinery, are fueling concerns about global oil supply disruptions. These factors collectively drove oil prices higher during the day.

 

Economic Calendar Highlights

High Impact:

March 14, 2024, 12:30 PM EST:

• Producer Price Index ex Food & Energy (YoY) (USD): This report measures inflation at the wholesale level, excluding volatile food and energy prices. A higher-than-expected reading could indicate rising inflation pressures, potentially leading to a more hawkish stance from the Federal Reserve.
• Retail Sales (MoM) (USD): This report shows the monthly change in total retail sales in the US. Strong growth in retail sales suggests healthy consumer spending, a key driver of economic growth. A weaker-than-expected number could raise concerns about slowing economic momentum.
• Retail Sales Control Group (USD): This is a broader measure of retail sales compared to the headline Retail Sales report. It includes data from gasoline stations and restaurants, providing a more comprehensive picture of consumer spending.
• Michigan Consumer Sentiment Index (USD): This survey measures consumer confidence in the US economy. A higher reading suggests optimism among consumers, which can translate into higher spending and economic growth. A lower reading could indicate pessimism and potentially weaker economic activity.

March 15, 2024, 12:30 PM EST:

• Industrial Production (MoM) (USD):This report measures the monthly change in the output of US factories, mines, and utilities. A strong increase in industrial production indicates a growing manufacturing sector, which is a positive sign for the economy. A decline could suggest a slowdown in manufacturing activity.

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