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13/03/2024 - 08:50 UTCThe US Dollar traded broadly in the green on Tuesday after the release of the monthly US Consumer Price Index numbers, with the dollar index (USDX) ending the session with gains of 0.08%. The reading showed that inflation remained stickier than expected, feeding into concerns that the Federal Reserve will have little impetus to begin trimming interest rates. February’s headline US CPI inflation ticked up to 0.4%, rising from the previous 0.3%, with YoY CPI inflation rising to 3.2% compared to the forecast hold at 3.1%.
Still, markets maintained their bets that the Fed will have enough cause to begin cutting rates by June, with a 25 basis point reduction still on the cards, according to the CME Fedwatch tool.
In other news, gold prices retraced from recent highs of $2,189.27 per ounce, trading close to $2,150 per ounce after a strong U.S. inflation reading kept fears of higher-for-longer interest rates in play. Part of the drop was attributed to some profit-taking in the yellow metal with Investors now waiting for the upcoming FOMC statement due later this month.
Wall Street was back on a positive track on Tuesday, with all three main stock indices closing in on their recently reached record highs despite the release of sticky inflation data. The move was largely supported by the tech sector and specifically Oracle and Nvidia. Oracle Corporation gained by around 12% following stronger-than-expected quarterly earnings on increased demand for its AI offerings. The cloud computing firm said it will make a joint announcement with Nvidia this week, citing expectations of increased AI-led demand for cloud infrastructure. NVIDIA Corporation rose by almost 7%, while megacaps Alphabet, Microsoft Corporation and Meta Platforms also ended the session in the green.
On the cryptos front, the two main cryptocurrencies by market capitalization Bitcoin and Ethereum, hit new highs on Tuesday’s session but eventually ended in negative territory with the new regulatory progress of the sector being in the spotlight as it could increase investor demand.
In today’s session, some price action could be observed upon the release of UK GDP, Eurozone industrial production and US Crude Oil inventories.
The EUR/USD pair traded between gains and losses on Tuesday and ended the session with minor losses of 0.04%.
Final German inflation figures printed exactly as expected, while a mixed print for US Consumer Price Index (CPI) inflation saw market participants shrug off inflation concerns and continue to bet on rate cuts from the Federal Reserve (Fed).
February’s headline US CPI inflation ticked up to 0.4 while YoY CPI inflation raised to 3.2%. Core CPI numbers eased, but not as much as expected, with MoM Core CPI holding at 0.4% instead of declining to the forecast 0.3%.
Market participants turn their attention to the upcoming US Core Producer Price Index (PPI) and Retail Sales data scheduled for release on Thursday.
Gold prices remained under pressure on Tuesday, dropping more than 1%, after a hot U.S. inflation report dimmed prospects of the Federal Reserve cutting interest rates soon.
U.S. consumer prices increased solidly in February, suggesting some stickiness in inflation. Data showed the Consumer Price Index (CPI) rose 0.4% monthly in February. Annually, it increased 3.2%, above the 3.1% forecast.
The market is still pricing an around 70% chance of a U.S. rate cut by June, according to the CME FedWatch tool. The next U.S. central bank policy meeting is due on March 20.
Oil prices retreated on Tuesday, settling slightly lower after a higher-than-expected forecast for U.S. crude oil production and bearish economic data, but persistent geopolitical tensions limited declines.
On Tuesday, OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024 and 2025, and further raised its economic growth forecast for this year saying there was more room for improvement.
On the supply side, U.S. Energy Information Administration raised its 2024 outlook for domestic oil output growth by 260,000 barrels per day to 13.19 million barrels, versus a previously forecast rise of 170,000 bpd.
Hopes of a ceasefire in Israel's war against Hamas have faded, with negotiations deadlocked in Cairo while Israel and Lebanon's Hezbollah continue to exchange fire.
U.S. stocks were higher after the close on Tuesday, as gains in the Technology, Consumer Services and Industrials sectors led shares higher.
At the close in NYSE, the US 30 gained 0.51%, while the US 500 added 0.84%, and the US Tech 100 climbed 1.01%.
U.S. stocks took a hotter-than-expected inflation report in stride, underpinned by fresh bullish bets in tech. Treasury yields moved higher on the prospect of higher for longer interest rate path, but that did little to stem bullish bets on tech, led by Oracle and a rebound in Nvidia.
Oracle Corporation surged nearly 12% after reporting stronger-than-expected quarterly earnings on increased demand for its AI offerings.
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