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12/03/2024 - 09:05 UTCThe dollar traded moderately higher against most major currencies on Monday, with the dollar index (USDX) ending the session with minor gains of 0.16%, following a 1% weekly decline. Recent comments from the Fed indicating that a decision to begin cutting rates will be data driven adds more weight on upcoming economic releases and specifically on CPI numbers that are due later today. The CPI is expected to show inflation remaining elevated and well above the Fed’s 2% annual target.
The CME Fedwatch tool indicates that bets for the first rate cut in 2024 to take place in the June FOMC meeting are at 59.4% while bets for an additional rate cut taking place in July are at 41.5%.
In other news, gold prices went as high as $2,189.27 per ounce on Monday, right below the recently reached record level of $2,195.4, and then reversed their course. The move could be attributed to profit taking as investors wait for the upcoming CPI data for more hints as to the timing of the Fed’s first rate cut.
Wall Street showed little change on Monday ahead of the upcoming inflation numbers, with all three main stock indices ending the session almost unchanged. Equity traders could also be watching closely Thursday’s retail sales data for February, which is expected to rebound 0.8% after declining a month earlier. In company news, several key market players will announce their Q4 earnings reports this week, among which are Lufax, MINISO, ZIM, UiPath, Dollar General, Hello Group, Weibo, Adobe and FiVe BELoW.
On the cryptos front, the two main cryptocurrencies by market capitalization Bitcoin and Ethereum, recorded new all-time highs on Monday, both rising by 4.47%. The new milestone for the popular crypto comes as signs of further regulatory progress that would deepen institutional investor demand in the crypto gathers pace. The Financial Conduct Authority said Monday that it wouldn’t block requests from domestic-exchanged for crypto-backed exchange-traded notes, or ETNs.
Aside from inflation data, today’s economic calendar also features a 10-year bond auction from the US as well as the claimant count change and the unemployment rate from the UK.
EUR/USD eased back on Monday, dropping away from 1.0950 as investors gear up for today's US Consumer Price Index (CPI) inflation.
The Euro peaked at 1.0980 on Friday, but the pair is falling back as markets pivot to fresh inflation figures as investors continue to hope for signs of sooner rather than later rate cuts from central banks.
Market expectations point to an increase in the US CPI for February month-over-month, although the yearly index is predicted to remain unchanged. Moreover, the release of Consumer Price Index (CPI) data from Germany is likely to capture the attention of investors.
Gold edged up on Monday, trading near its highest ever level after a record rally last week, as market participants hunkered down for U.S. inflation data that could provide more clarity on the Federal Reserve's interest rate trajectory.
The U.S. consumer price inflation (CPI) data for February is due on Tuesday. Traders are pricing in an around 70% chance of an interest rate cut by June, according to the CME FedWatch tool.
Low interest rates help gold prices as they reduce the opportunity cost of holding zero-yield bullion.
Oil prices were little changed on Monday as investors looked ahead to key U.S. inflation data and a fresh update on the global supply and demand outlook for oil due this week.
Furthermore, monthly reports from OPEC, and International Energy Agency slated for Tuesday and Thursday, respectively, will provide an updated outlook on the global crude demand and supply at time when many continue to fret over sluggish demand.
The outlook on demand will also be shaped by expectations about global rate cuts, with a slew of data this week likely to influence the Fed's thinking ahead of its monetary policy this month.
U.S. main indexes ended the session on Monday with minor gains while investors preparing for this week's consumer and producer price data, which they hope will provide a better idea of whether the Federal Reserve can begin cutting interest rates in the coming months.
U.S. consumer price data for February is due on Tuesday, with expectations for a monthly increase of 0.4% and 3.1% on an annual basis. The U.S. producer price report is due on Thursday.
Oracle was one of the best performers in aftermarket trade, surging nearly 14% after clocking stronger-than-expected quarterly earnings on increased demand for its AI offerings.
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