After an optimistic start this week following the Federal Reserve meeting, progress has been stifled by a resurgent US dollar.

Investors remain wary of risky assets as they wait to gauge how further market sentiment will be affected.

What To Expect This Week

This week, risk assets have hit a snag in their upwards climb following last week’s Federal Reserve meeting surge.

With the US dollar staying strong and Treasury yields showing signs of expansion, this might be an indication that recent market optimism could have been overstated. 

But don’t despair – we’re still seeing positive trends on Wall Street implying there may yet be another chance for high-flying stocks to reach further heights!

Keep your eyes peeled as next we’ll get deeper insight into the Fed’s stance when they reveal Consumer Price Index figures – plenty more food for thought right there! 

Plus Singapore is also serving up some exciting news with its upcoming 2023 budget statement.

All good reasons to stay alert about potential movements in both markets.

Switzerland CPI – February 13,2023

On 13th February 2023, be sure to keep an eye on Switzerland’s Federal Statistical Office’s release of their Consumer Price Index (CPI).

This index measures how much prices are changing in goods and services that consumers purchase. A higher Actual than its forecast is a good sign for any currency.

US CPI -February 14,2023

With markets used to mixed messages on inflation, the upcoming US Consumer Price Index will be an important gauge of risk sentiment.

Analysts are forecasting a drop from 5.7% pricing pressures last year to just over 5%, but next month’s data could throw up unexpected surprises – so stay tuned!

Despite ‘dovish’ expectations, US inflation is likely to surprise with an increased 0.4% on core CPI and headline figures expected to rebound at a solid rate of 0.5%, following last month’s contraction.

These numbers could mean that the Fed will take longer before pausing interest rates – making us wonder what further surprises are in store!

The US dollar has been showing strength recently, clinging to a resistance with an eye towards pushing higher.

If it clears the 103.20 mark, investors may have reason for caution in terms of equity values going forward as we could see the greenback reach its next milestone: 105!

Japan GDP Report-February 14,2023

Japan’s Q4 GDP figures are set to shine a light on the country’s recent economic trends. With domestic services propped up by reopening efforts, it’ll be interesting to see whether strong private consumption can make up for slipping exports due an uncertain global climate – all while aiming towards 2% growth in comparison with last quarter’s 0.8% decline!

Despite some moderation in its upward trajectory, the Nikkei 225 index has held up impressively over recent weeks thanks to investors placing their faith in Japan’s monetary policies.

Looking ahead though, if it dips any lower there could be a focus on 26,900 – where an important Fibonacci retracement resides.

US Retail Sales – February 15,2023

After two months of decline, the US retail sector looks to be bouncing back with a projected increase in sales and renewed optimism among both market bulls and bears. 

Could this mark an end-of-year recovery or will increasing pricing pressures mean tighter policies are needed? Only time will tell!

Market participants are taking a wait-and-see approach before the US inflation release, as any indication of accelerating price pressures could lead to an increase in peak rate expectations. 

If we see signs that consumer demand is outstripping supply, it’s possible rates may jump higher than their current range – up to 5.25 -5.5%.

Market Summary

Crude Oil price

Crude oil wasn’t looking so hot as the US dollar found its stride, but experts suggest this dip might just be a hurdle we’ll need to jump over.

After hitting a two-week high on Friday, oil prices cooled off today. WTI futures dipped under $79 barrel while Brent stayed close to $85.50 – potentially influenced by fears over Tuesday’s inflation report out of the US and its implications for Federal Reserve policy. 

Futures 

The latest data suggests that markets could be in store for an even higher target rate than initially anticipated this year, with Fed funds peaking above 5.20%.

US Dollar Performance

The Dollar has had a strong performance against the Yen so far today, and there’s plenty of anticipation about who will become Japan’s next central bank governor. 

The 10-year JGB yield

The 10-year JGB yield is nearly hitting its upper limit while Treasury yields remain elevated. 

Gold Prices

Meanwhile gold prices are down slightly from Friday with Asian equity markets generally trading in negative territory – except for those based on mainland China that have seen slight gains!

US stock futures suggest Wall Street may open lower too… It looks set to be an interesting few days ahead!

Read The Full Economic Calendar Here…..

Wall Street Updates

It was a bumpy ride for global markets this past week.

Wall Street stayed relatively steady, but the UK’s FTSE 100 and Germany’s DAX 40 suffered some losses while Asia-Pacific investors had a rougher go as Hong Kong’s Hang Seng Index and Australia’s ASX 200 each dropped by more than 1%.

Thanks to a powerful non-farm payrolls report and hawkish Fedspeak, it looks like markets have shifted their expectations around interest rates this year.

Rather than predicting rate cuts by the end of 2020, traders now believe that they won’t see any reduction in policy tightening anytime soon!

Last week saw a mixed performance from the US Dollar as it managed to outperform its rivals, but was notably bested by the British Pound and Australian Dollar. UK economic data showed that growth had just barely avoided slipping into recession, great news for Sterling!

The focus shifts once again this upcoming week with US CPI in view – all eyes will be on whether inflation eases further or not. Don’t forget about important Aussie employment figures if you’re trading AUD/USD either – who knows what other surprises are lurking around the corner?

Earnings Calendar

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