Currencies are off to a quiet start to the week, recovering from Friday’s Nonfarm payroll volatility and looking ahead to tomorrow’s U.S. CPI data for February. The dollar is stronger vs. most G10 pairs, following through on Friday’s late rally. The widest dollar gains are primarily vs. commodity currencies which are following oil prices lower. Dollar gains: +0.41% vs. NOK, +0.27% vs. SEK & AUD, +0.26% vs. GBP and +0.14% vs. CAD.
Headline M/M CPI is forecast +0.4% (+0.3% prior). Core CPI (excludes food and energy) is forecast +0.3%, down from January’s +0.4% reading. The forecast for Y/Y CPI is +3.1%, and Y/Y Core CPI is forecast to be 3.7% (3.9% previous). Gasoline prices are +20.47% YTD, helping to keep consumer prices elevated.
U.S. Treasury yields are modestly higher in the near tenors and the benchmark 10-year yield is +0.008% at 4.0837%.
The FOMC begins its next rate policy meeting next Tuesday and is scheduled to announce its key rate policy on Wednesday, March 20th at 2pm ET. No change is expected to the current 5.50% target rate. Fed Funds futures imply only a 2% probability of a cut next week and a 20% probability for a 25 basis-point cut at the Fed’s May meeting.
Gold prices are higher for the 9th consecutive day, gaining 0.24% since Friday’s close. Gold has gained 10.04% since the yearly low at $1,984.09 on February 14th.
