Breaking News: Market Analysis – US Inflation Data and Job Market Update
Yesterday’s core US CPI for August slightly exceeded expectations, leading to a slight adjustment in the expected 2024 Fed easing cycle. Despite this, 100bp is still priced in, and we do not anticipate significant changes in expectations today. ING’s FX strategist Chris Turner highlights the upcoming focus on August PPI readings and weekly initial claims data.
Key Focus: DXY Resistance Levels and Market Trends
The market is closely monitoring PPI readings this year, with a particular emphasis on key components such as portfolio management fees, healthcare costs, and airfares. These factors impact the Fed’s preferred inflation measure, the core PCE deflator. However, with the Fed signaling a shift towards rate cuts, market attention has shifted towards activity data, especially jobs data. The holiday-shortened week may keep initial claims data low around 225,000, indicating stability in the US calendar.
Market Trends and Outlook: Dollar Weakness and Euro Strength
Today, the dollar faces downward pressure as the risk environment appears slightly more favorable. There is anticipation for a stronger euro, which holds significant weight in the DXY index. Positive movements in tech stocks, particularly Nvidia, have driven the S&P 500 up by 1% and sparked rallies in Asia. Additionally, there is speculation that Chinese leaders may introduce fiscal support measures, potentially targeting consumers, during the National People’s Congress this week.
Analyzing Potential Market Impact and Forecast
Any steps taken by Chinese leaders to address weak demand would be well-received by markets, alleviating stagnation concerns that have affected energy markets. If our prediction for EUR/USD holds true, we could see the dollar weakening further, potentially reaching 101.00 by the end of the day.
In conclusion, stay informed about market trends, inflation data, and job market updates to make informed financial decisions. Stay tuned for more updates on market analysis and trends.