Forecasting the Coming Week: US CPI takes centre stage

A dreadful week for the Greenback ended with the USD Index (DXY) retreating to two-month lows near 102.30 as investors continued to price in a rate cut in June, while the move lower in US yields also accompanied the downside in the Dollar. Closer to home, the ECB left its policy rates unchanged, as expected, while investors also see the central bank starting its easing cycle in June.

The USD Index (DXY) navigated a “sea of red” this week, accelerating its losses to the low-102.00s in the wake of a firmer US NFP on Friday. Next week, the US Inflation Rate is due on March 12 and is expected to remain at the centre of the debate. On March 14, Producer Prices are also due, along with Retail Sales, weekly Initial Jobless Claims, and Business Inventories. Closing the week emerges Industrial Production and the advanced Michigan Consumer Sentiment.

EUR/USD gathered extra upside traction and finally left behind the 1.0900 hurdle in quite convincing fashion amidst rising bets for an ECB rate cut in June. On the domestic calendar, the final Inflation Rate in Germany is due on March 12, while Industrial Production in the broader Euroland will be published on March 13.

The continuation of the upward trend lifted GBP/USD to multi-month peaks at levels just shy of 1.2900 the figure. An interesting UK calendar next week will see the release of the labour market report on March 12, seconded by GDP figures, Construction Output, Goods Trade Balance, Industrial and Manufacturing Production, and the NIESR Monthly GDP Tracker, all due on March 13.

USD/JPY increased its weekly decline to fresh five-week lows near 146.50 on the back of the deep sell-off in the Greenback and investors’ speculations of a potential BoJ lift-off later in the month. Next week kicks in with the final Q4 GDP Growth Rate, while Producer Prices and the BSI Large Manufacturing index are due on March 12. Additionally, the usual weekly Foreign Bond Investment figures are due on March 14, and the Tertiary Industry Index is expected at the end of the week.

AUD/USD managed to surpass the key 0.6600 barrier and rise to two-month peaks exclusively on the back of Dollar dynamics. In Australia, Consumer Inflation Expectations are due on March 15.

In China, Inflation Rate and Producer Prices come on March 9 prior to New Yuan Loans on March 12 and the House Price Index on March 15. USD/CNH navigated a side-lined range throughout the week, slipping back below the 7.2000 region on Friday.

Anticipating Economic Perspectives: Voices on the Horizon

-      RBA S. Hunter speaks on March 11.

-      BoE C. Mann speaks on March 12.