All eyes are on U.S. inflation data

The US dollar hovered around a flat line in early Tuesday’s session as many economists await a US inflation report, while the Japanese yen strengthened after Japan announced the appointment of Kazuo Ueda as the new governor of the Bank of Japan. Market participants are closely watching US consumer price index (CPI) data for clues about the Federal Reserve’s future rate. Headline inflation is expected to rise 0.5% in January after falling 0.1% last month. According to Reuters. The dollar index, which tracks the US dollar against six other major currencies, was near 103.17 after falling 0.3 % in the last session, but was up about 1% for the month of February. “There are initial signs that US inflation is cooling… (but) core inflation has its limits, although services inflation remains very high,” said Kristina Clifton, senior economist at the Commonwealth Bank of Australia. . He continued that services inflation, which is correlated with wage growth, has shown no signs of slowing down, adding that it may require softer working conditions to materialize. “Although the labor market remains tight and wage growth is very strong, there is a risk that we are in for unexpected core inflation numbers,” he added. On February 1, the Federal Reserve raised interest rates by 25 basis points saying it had “reached a turning point in the fight against inflation”. The consumer price index fell before the end of 2022. However, in 2023, it could show that inflation will remain high, according to Wall Street expectations. According to a survey by Dow Jones, the consumer price index is expected to rise 0. % from December and 6.2% for the year. The basic consumer price index, which takes into account changes in food and energy prices, will increase by 0.3% compared to the previous month and by 5.5% annually. “In Tuesday’s CPI report, all eyes will be laser-focused on assessing the likely trajectory of the market in Q1 and beyond,” said Greg Bassuk, CEO of AXS Investments. “We’ve had some surprises on the soft side over the last three months. It wouldn’t be at all surprising if we were surprised by a warm January,” says Mark Zandi, chief economist at Moody’s Analytics. The Fed’s , members closely monitor inflation data and various other economic data for indications of how the eight rate hikes so far will affect the economy and how they will affect inflation, which hit a near 1-year high last summer. “We should not be too attached to any monthly movement,” he said. “Overall, looking at monthly variations, we should see a continued year-over-year decline,” Zandi added. Oil prices fell in the early session on Tuesday after the US government said it would release more crude from its Strategic Petroleum Reserve (SPR) as ordered by lawmakers. Brent crude futures at , were down about 3 cents at $86.18 a barrel by 0730 GMT, while U.S. crude futures were down about 71 cents at $79. 3 a barrel. The US Department of Energy (DOE) announced the release of 26 million barrels of oil from the Strategic Reserve, which could push SPR close to its lowest level since 1983. “Energy traders were waiting for news about the replenishment of the SPR and did not use it to buy more shares,” said Edward Moya, analyst at OANDA. In addition, many oil traders are focused on Tuesday’s US CPI report “Any stronger than expected data could cause risk assets, including oil, to sell off again,” CMC analyst Tina Tengi said. The market said. “Oil is on the defensive and could depreciate if inflation becomes harder to tame,” added OANDA Moya.

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