- US core inflation rose above expectations in January a sign of the rising economy finally generating some price pressures.
- The US core retail sales disappointed in January.
US stock futures (SPX-500) are now trading down 0.4% at around 2,643 during pre-New York session, after the US inflation figures surprised on the upside rising 0.5% m/m and 2.1% y/y in January. At the same time, the US core retail sales fell -0.3% m/m in January. The news is equity market negative with main indices instantly falling in a knee-jerk reaction. The combination of low growth and higher inflation known as “stagflation” scared investors that sold futures to their intraday low of 2,627.
The much awaited and the “most important ever” US core CPI for January rose 0.3% m/m compared to 0.2% m/m increase expected by the market. When compared to a year ago, the core inflation rose 1.8% y/y vs estimate of 1.7% y/y. The headline CPI rose 2.1% vs estimate of 1.9% dwelling at the unchanged level from December.
The core retail sales in the US stagnated in January compared to the market estimate of 0.5%.
Subsequently, US10YTSY yield surged to 2.882% and SPX-500 tumbled and USDJPY jumped as the market is now discounting a hawkish Fed, looking for at least 3 rate hikes in 2018 to stay ahead of the inflation curve.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.