US Dollar steady as dust settles over recent CPI shocker

NEW YORK (February 14) The US Dollar (USD) is throwing a few good punches at the markets with a substantial rally midweek. The move comes on the back of surprise upticks in US monthly inflation (both headline and core). This in turn is triggering an earthquake in markets, which has sent equities nosediving, yields soaring and the US Dollar rallying against every major currency peer.

On the economic data front, a very light calendar offers room for markets to digest and recalibrate. Do not expect much from any single economic data point ahead this Wednesday with the Mortgage Applications Survey. Rather look for clues from US Federal Reserve members Austan Goolsbee and Michael Barr, who are speaking today and could soften the current inflation print with a nuanced message. 

Daily digest market movers: CPI is done, time to look forward

• Goldman Sachs was quite quick to come out with a report in the US Consumer Price Index (CPI) aftermath saying that the February numbers will be substantially lower and writing off the current knee jerk reaction in CPI numbers due to the intensive seasonal holiday period over December and January.  A mere drop on a hot plate thus, according to Goldman Sachs.
• North Korea has fired multiple cruise missiles off the East Coast. 
• The weekly Mortgage Applications Index went into contraction by 2.3%, coming from a positive 3.7% previous week.
• Two US Federal Reserve speakers are set to make comments this Wednesday: Around 14:30 GMTChicago Fed Austan Gooldsbee, and later near 21:00, Fed’s Vice Chairman Michael Barr will speak. 
• Equity markets are trying to recover with European equities mildly in the green. US equity futures are even more up than European ones, with the Nasdaq leading the charge, up 0.50%.
• The CME Group’s FedWatch Tool is now looking at the March 20th meeting. Expectations for a pause are 91.5%, while 8.5% for a rate cut. In terms of overweight expectations for a rate cut, the dial has moved from May/June now into summer towards July.
• The benchmark 10-year US Treasury Note trades near 4.30%, a touch softer from its peak on tuesday at 4.33%.

FXStreet