Yesterday, the consumer price index (CPI), a US economic indicator that has attracted a lot of attention, was announced. The result was +6.4% from the previous year, a slight decrease from the previous value, but exceeded market expectations. Market reaction fluctuated wildly, but in the end, there is a history of calming down to a strong dollar.
The prevailing view is that the US Fed’s suspension of interest rate hikes will be postponed as the persistence of inflation has been shown. Looking ahead, however, expectations for a rate hike at the FOMC meeting in March are stable at 25 basis points. Yesterday’s US CPI is likely to be evaluated as relatively uneventful.
Today, notable indicators such as US retail sales, US industrial production, and the NY Fed index will be announced. The recently released U.S. employment statistics were extremely strong, suggesting that the outlook for the U.S. economy is becoming brighter in the market. Until now, the hope was that the economy would avoid a hard landing and land in a soft landing. However, the focus now seems to be on the strength of the US economic recovery. There are also some voices hoping for a “no landing” without an economic slowdown.
Both the US retail sales (January) and the US industrial production index (January), which will be announced in New York time, are expected to turn positive compared to the previous month. The New York Fed’s manufacturing index (February) is expected to improve amid negative figures. If it seems to be stronger than expected, it will likely support the view of no landing.
First, pay attention to January US retail sales numbers, which will be announced at 22:30. It is assumed that the direction may change again here.