In the spotlight today: inflation.
A surge in volatility is expected at the beginning of the trading session, driven by the release of inflation data. The consensus anticipates a 4% year-on-year increase in the core indicator and a 0.3% month-on-month rise (October: +0.2% month-on-month). If the slowdown in consumer inflation persists, it will signal to the market that the Federal Reserve may transition to a more accommodative monetary policy in the second quarter of 2024. It's worth recalling that the previous easing in the Consumer Price Index growth in October sparked an active stock market rally.
Inflation data will be published a day before the conclusion of the last Federal Reserve meeting of the year, influencing the update of the regulator's macroeconomic forecasts. However, even if the statistics confirm the expected inflation slowdown, the Federal Reserve is likely to emphasize the need for further confirmation of trends indicating labor market cooling and inflation reduction for at least several months before considering a change in monetary policy. In this context, the Fed's decision is unlikely to catch investors off guard.
#Inflation #EconomicIndicators #FederalReserve #MonetaryPolicy #MarketVolatility
A surge in volatility is expected at the beginning of the trading session, driven by the release of inflation data. The consensus anticipates a 4% year-on-year increase in the core indicator and a 0.3% month-on-month rise (October: +0.2% month-on-month). If the slowdown in consumer inflation persists, it will signal to the market that the Federal Reserve may transition to a more accommodative monetary policy in the second quarter of 2024. It's worth recalling that the previous easing in the Consumer Price Index growth in October sparked an active stock market rally.
Inflation data will be published a day before the conclusion of the last Federal Reserve meeting of the year, influencing the update of the regulator's macroeconomic forecasts. However, even if the statistics confirm the expected inflation slowdown, the Federal Reserve is likely to emphasize the need for further confirmation of trends indicating labor market cooling and inflation reduction for at least several months before considering a change in monetary policy. In this context, the Fed's decision is unlikely to catch investors off guard.
#Inflation #EconomicIndicators #FederalReserve #MonetaryPolicy #MarketVolatility
📊 The Impact of Eurozone CPI YoY on Various Financial Areas:
1. Currency Markets: The inflation level can influence the euro exchange rate. High inflation may prompt central banks to raise interest rates to curb inflationary pressures, making the euro more attractive to investors and increasing its value in the currency market. #CurrencyMarkets #Inflation #Euro
2. Bonds: Inflation affects the bond market. An increase in inflation can reduce the real value of bonds, especially those with fixed coupons. Investors typically demand higher bond yields to offset losses from inflation. #Bonds #InflationImpact #FinancialMarkets
3. Stocks: The impact of inflation on stock markets can be twofold. High inflation can negatively affect company profits and reduce their real value, impacting stock prices. However, under moderate inflation, rising prices for goods and services may contribute to increased company profits and, consequently, stock prices. #Stocks #InflationEffect #EquityMarkets
4. Gold and Commodities: Investors often view precious metals and commodities as protective assets against inflation. High inflation levels may boost demand for such assets, including gold. #Gold #Commodities #InflationHedge
5. Central Banks: Eurozone central banks may use CPI data to shape their monetary policies. High inflation levels may lead to interest rate hikes, while low inflation may prompt rate cuts. #CentralBanks #MonetaryPolicy #InflationData
It's important to note that the impact of the Consumer Price Index depends on the economic context, the overall direction of central bank policies, and other factors. Market reactions may vary over different time periods and depending on investor expectations. Stay informed to navigate the dynamic financial landscape. 📈💹 #FinancialAnalysis #MarketImpact #EconomicIndicators
1. Currency Markets: The inflation level can influence the euro exchange rate. High inflation may prompt central banks to raise interest rates to curb inflationary pressures, making the euro more attractive to investors and increasing its value in the currency market. #CurrencyMarkets #Inflation #Euro
2. Bonds: Inflation affects the bond market. An increase in inflation can reduce the real value of bonds, especially those with fixed coupons. Investors typically demand higher bond yields to offset losses from inflation. #Bonds #InflationImpact #FinancialMarkets
3. Stocks: The impact of inflation on stock markets can be twofold. High inflation can negatively affect company profits and reduce their real value, impacting stock prices. However, under moderate inflation, rising prices for goods and services may contribute to increased company profits and, consequently, stock prices. #Stocks #InflationEffect #EquityMarkets
4. Gold and Commodities: Investors often view precious metals and commodities as protective assets against inflation. High inflation levels may boost demand for such assets, including gold. #Gold #Commodities #InflationHedge
5. Central Banks: Eurozone central banks may use CPI data to shape their monetary policies. High inflation levels may lead to interest rate hikes, while low inflation may prompt rate cuts. #CentralBanks #MonetaryPolicy #InflationData
It's important to note that the impact of the Consumer Price Index depends on the economic context, the overall direction of central bank policies, and other factors. Market reactions may vary over different time periods and depending on investor expectations. Stay informed to navigate the dynamic financial landscape. 📈💹 #FinancialAnalysis #MarketImpact #EconomicIndicators
USD/JPY Strengthens Amid Dollar Decline and Expectations of Monetary Policy Easing
📊 The USD/JPY pair consolidates above the 145.00 level in the early Asian session. Despite a decline in the US dollar, USD/JPY shows growth supported by the unexpected decrease in US Producer Price Index (PPI) and expectations of Fed interest rate cuts in 2024. The Bank of Japan is expected to maintain its ultra-loose policy, despite a reduced inflation forecast. Trading Recommendation: Primarily trade on Buy from current levels. #USDJPY #Forex #MonetaryPolicy
📊 The USD/JPY pair consolidates above the 145.00 level in the early Asian session. Despite a decline in the US dollar, USD/JPY shows growth supported by the unexpected decrease in US Producer Price Index (PPI) and expectations of Fed interest rate cuts in 2024. The Bank of Japan is expected to maintain its ultra-loose policy, despite a reduced inflation forecast. Trading Recommendation: Primarily trade on Buy from current levels. #USDJPY #Forex #MonetaryPolicy