Marketwatch North America

Daily Insights
February 13, 2024

U.S. Consumer Price data released today for January was higher than forecast in all categories. Consumer prices increased 3.1% from a year ago, above the 2.9% forecast but lower than December’s Y/Y reading at 3.4%. Core CPI (excludes food and energy) increased 3.9% compared to a year ago, above the 3.7% estimate and matching last month’s 3.9%. Monthly consumer prices increased 0.3% December to January, above the 0.2% forecast. And core M/M CPI increased 0.4%, higher than both the 0.3% estimate and previous 0.3%.

Steady inflation is one thing but rising inflation clashes with the Fed’s recent shift in its rate stance, having replaced ‘tightening’ with ‘any adjustments’ in its rate policy statement on Jan 31st. In the face of higher inflation, the data-dependent Fed will have to push back any speculation of near-term cuts for at least another month, and at least partially revives the rate hike dialogue.

The dollar is sharply higher following the CPI data (higher rates for longer is an incentive to hold USD), lifting the U.S. Dollar Index to 104.87, a 0.58% daily gain and its highest mark since Nov 14th. Resistance at 105.00 is now within easy reach. The dollar is higher against all G10/majors and testing significant resistance in several currency pairs. EUR/USD broke below 1.0750, bringing a 1.0675/1.0700 range into view. USD/JPY broke above 150.00, now up 0.74% today and closer to November’s historic high at 151.92.

U.S. Treasury yields are sharply higher, the biggest gains in the 3yr-10yr tenors. The 3-year tenor leads all gains +0.127%. The benchmark 10yr tenor is now trading at 4.275% compared to yesterday’s 4.18% close. The year-end implied target rate is now 4.366% after reaching 3.65% as recently as Jan 12th.

Prolonged elevated borrowing rates are a headwind to corporate earnings leading to today’s sharp decline in equities. The major U.S. equity indexes are all lower by at least 1%, the Nasdaq leading with a 1.7% decline. Gold is -1.21% at $1,995/oz and silver is -2.63% at $22.09oz.

Economic Calendar

CNY - Bank Holiday
AUD - NAB Business Confidence
USD - NFIB Small Business Index
USD - Core CPI m/m
NZD - Inflation Expectations q/q
JPY - Prelim Machine Tool Orders y/y
USD - CPI m/m
USD - CPI y/y
GBP - Claimant Count Change
GBP - Average Earnings Index 3m/y
GBP - Unemployment Rate
CHF - CPI m/m
EUR - ZEW Economic Sentiment
EUR - German ZEW Economic Sentiment
NZD - FPI m/m

Market Indicators

Currency Pairs
Pair High Low
usd/jpy 150.581 149.211
eur/usd 1.07974 1.07004
gbp/usd 1.26871 1.25794
aud/usd 0.65347 0.64598
usd/cad 1.35314 1.3436
eur/gbp 0.85351 0.84999
usd/mxn 17.189 17.0493
Equities and Commodities
S&P 500 4962.13
NASDAQ 17579
DOW 38504.1
GOLD 2003.25
SILVER 22.32

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.