Forex Signals Brief Feb 14: UK January CPI Inflation Rate to Pick Up Too
yesterday started with inflation expectations by the RBNZ which came lower than the previous ones, weighing on the NZD which eventually ended the day around 100 pips down after the strong US CPI inflation report. Inflation slowed in Switzerland as well, which sent USD/CHF 60 pips higher, while in the UK, employment numbers came in higher. But at the end of the day, they couldn’t help GBP/USD which also fell after the US inflation report.
The report contained some significant data points that kept the USD strong until the end of the day. Services excluding rent jumped 0.6% higher, with the core reading showing its highest level in many years. So, the market is increasingly thinking that the FED will need to maintain higher interest rates for an extended period.
US bonds also surged higher, with the 10-year bonds climbing to 4.32%. The US benefited from the report, gaining more than 100 pips across the board, while USD/JPY climbed 160 pips higher, reaching 150.80. EUR/USD fell to 1.07, but that level held exactly to the pip after several attempts to break below.
Today’s Market Expectations
The day starts with the most important event of the day, the UK CPI inflation rate for January, which is expected to show an increase to 4.2% for the CPI YoY number, up from 4.0% in the previous year, while the monthly reading is expected to be 0.3%, down from 0.4% before. The Core CPI is predicted to rise to 5.2% year on year, up from 5.1% before. The latest report showed an increase, prompting a hawkish shift in interest rate forecasts. The Bank of England (BoE) is particularly concerned with services inflation, so that would be the most crucial statistic to monitor.
Later we’ll have the flash GDP report from the Eurozone, which is expected to show that the economy stagnated, coming at 0.0%. However, we might see another miss in Q4, similar to the Q4GDP report. This would put the Eurozone economy in a technical recession and send EUR/USD toward 1.05, as the ECB would turn even more dovish. The Eurozone Industrial Production is expected to decline again in January, confirming the recession in this sector.
There will be speeches from BOE Governor Andrew Bailey in the afternoon after the inflation report, which will likely have some impact on the GBP as well. The RBA Governor Bullock will also speak in the evening. Besides that, we have speeches from Federal Reserve officials, particularly those from dovish members like Goolsbee, who may find it challenging to justify further discussions about rate cuts given the recent data. If he doesn’t sound dovish, we will likely see another rally in the USD.
BTC/USD – Daily Chart The $2,500 Level Holds in Ethereum
The price of ETHEREUM has been steadily rising since its January drop, which brought it near to $2,000. We decided to open a buy ETH signal down there, which was successful as purchasers returned. They pushed the price beyond $2,600 on Monday, which triggered our trade’s take profit but yesterday the price retreated $100 lower.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $2,290
- Stop Loss: $2,590
- Take Profit: $1,750
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