- Optimism Turns to Caution as USD Strengthens
- CPI Data Keenly Awaited
- Futures Lower After Huge Gains on Wall Street
It was a Super Tuesday indeed yesterday. Not only for the forex market but the wider equities market came back strongly with the NASDAQ posting huge gains the like of which had not been seen so far this year. Today the waters have calmed as attention turns to key CPI data. This has led to a USD bounce back as trading remains cautious. The futures market in early trading is also quiet as many choose to take a breather following the amazing comeback earlier in the week.
Dollar Strength Hits Euro & GBP
The optimistic outlook of yesterday as it often does, meant weakening of the Dollar as those in forex trading and beyond moved away from traditional safe-haven assets. The push back complete though and attention is starting to shift. The major data in focus is from CPI figures.
Alongside this, today is a big day for bonds with the US 10-year treasury notes being auctioned. A great deal of focus has been put on these bonds as a key indicator as to the possibility of inflation and overheating in the market so any major developments here are sure to impact the markets later in the day with information due in the afternoon. In the meantime, trading remains tentative with both the Euro and Pound losing ground slightly on the back of a stronger USD.
Inflation Numbers Hold the Key
The release of CPI data is always keenly watched, none more than today, however. The increased prospect of inflation has really been an important reason behind recent shakiness in the market. The numbers projected to be released later today should show a rise from 0.3% to 0.4% in February, and to 1.7% annually with similar numbers predicted across the board.
Any deviation here, particularly to the higher end, could see a swift return to market uncertainty as was seen during last week. Fed Chair Jerome Powell remains confident though that any inflation which does occur at higher levels will purely be transitory. The Fed’s target for inflation remains at 2% with no rate rise yet seeming to be on the cards.
Market Reflection After Massive Day
Early trading on Wall Street shows that the market is taking a breath after a rampant day yesterday. Forex brokers noted movements away from the Dollar as traders piled into the tech-heavy NASDAQ which charted its biggest day in several months.
There were huge rebound gains for the likes of Tesla which was up as much as 20%. They were joined by a host of other big names including Apple. This has restored some of the index losses from February and started them off on a strong footing for March. Many will still be awaiting CPI data release today though as key to whether the market continues to march upward.