Key Data Points:
Headline CPI: +3.0% y/y (vs. +2.9% expected), up from +2.9% prior.m/m: +0.5% (vs. +0.3% expected), unrounded at +0.467%.Core CPI (Excluding Food & Energy): +3.3% y/y (vs. +3.1% expected).m/m: +0.4% (vs. +0.3% expected), unrounded at +0.446% (vs. prior +0.225%).Real Weekly Earnings: -0.3% (vs. -0.1% prior).Core Services Ex-Shelter: +0.757%.Core CPI Services Ex-Rent/OER: +0.5%.Services Ex-Energy: +0.5%.Market expectations for rate cuts in 2025 dropped significantly after the report, with pricing now reflecting only 31 basis points of expected easing, down from 40 basis points before the report. Given the +0.4% core and +0.5% headline inflation readings, achieving 2% inflation this year looks increasingly difficult.
Federal Reserve Policy & Independence
Inflation & Monetary Policy
Labor Market & Economic Strength
Fiscal Policy & Government Spending
Housing & Commercial Real Estate
Market Expectations & Interest Rates
IN the US stock market, the major indices fell sharply near the start of trading but as the day went on and traders digested the news, Fed's Powell was not an alarmist and there were overtures for peace in the Ukraine/Russia war, the declines were chipped away (at least in the S&P and the Nasdaq).
Dow was down -489 pointsS&P was down -65.50 pointsNasdaq was down -228.37 points
At the close, the Dow and S&P still closed lower but the Nasdaq did close positive on the day. The final numbers are showing:
Dow industrial average -225.03 points or -0.50% at 44368.62.S&P index -16.56 points or -0.27% at 6051.94.NASDAQ index rose 6.09 points or 0.03% at 19649.95.Worth mentioning is shares of Meta closed higher for the 18th consecutive day. This 18-day streak surpasses Meta's previous record of 11 consecutive days of gains in September 2015 and sets a new benchmark among the "Magnificent Seven" tech stocks. Shares closed higher by $5.50 or 0.76%
2-year yield 4.361%, +7.1 basis points 5 year yield 4.474%, +10.5 basis points10 year yield 4.631%, +9.4 basis points30 year yield 4.833%, was a .4 basis points
The USD is ending the day mixed with gains vs the JPY, AUD, NZD, declines vs the EUR, and unchanged vs the GBP, CHF and CAD. .
Subsequent breaks above the 200 hour MA at 153.17, the 38.2% at 153.959 helped lead the way for a final stretch up to the low of a key swing area target area between 154.77 to 154.96. Within that range also sits the key 50% of the 2025 trading range at 154.897.
The EURUSD fell sharply on the CPI data, and reached below the 100 and 200 hour MAs at 1.0344 (converged). The low reached 1.0316.
The corrective low off the high stayed above a swing area between 1.0371 to 1.03814. That area will be close support in the new trading day. On the topside a move back above 1.0405 (50% of the range since 2022) would increase the bullish bias for the pair after a VERY volatile trading day.
Support is not at the 100/200 hour MAs at 1.2412 to 1.2420.
Crude oil fell sharply on hopes for peace and Russian oil. The price is down $1.98 or -2.7% at $71.34Silver is up $0.40 or 1.24% at $32.22Gold is the $2.70 or 0.09% at $2890.92Bitcoin is trading of $1400 at $97,192
Tomorrow in the US session, PPI data will be released at 8:30 AM ET with expectations of +0.3% for the headline and the core measure. The number crunchers will be forecasting the PCE data from the combination of the CPI and PPI numbers.
UK GDP is expected to show -0.1% for the quarter
This article was written by Greg Michalowski at www.forexlive.com. Read More Details
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