Euro shrugs off rate cut bets

Published on 13.03.2024 08:41

The Euro continues to hover around the 1.09 mark as we get ready to enter todays European trading session after yesterday’s round of data through into doubt the predicted rate rise from the US Federal Reserve in June.

Headline US CPI inflation from last month edged higher to 0.4%, rising from the previous 0.3%, with YoY CPI inflation moving to 3.2% compared to the forecast hold at 3.1%. 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%. YoY Core CPI ticked down to 3.8% from the previous 3.9 percent but missed market forecasts of 3.7%.

On the European side, German inflation figures hit the market exactly as expected, coming in at 0.4 percent on a monthly basis, unchanged from last month while the yearly figure came in at 2.7 percent and identical to last month.

The CPI figures have now thrown into doubt a rate cut from the Fed in June but some say it will take more than one round of unexpected news to delay a move from the US central bank.

"This print is just about enough to keep rate cut expectations for June stable - but another print like this next month would push the first cut into the second half of the year, putting the soft landing narrative in question," said Seema Shah, chief global strategist at Principal Asset Management.

With no major news out of the US today, the focus will be on the EU Industrial Production figures which is forecast to print at -1.5% MoM in January, down from the previous month’s 2.6% and is unlikely to cause any major volatility in the EUR/USD currency pair.

 US data will return with a vengeance on Thursday with US Producer Price Index (PPI) figures. Core YoY US PPI is forecast to tick down slightly to 1.9% from the previous 2.0%.US Retail Sales in February are also slated for Thursday and are expected to recover to 0.8% after the previous -0.8% decline. US Initial Jobless Claims for the week ended March 8 is also expected to tick up slightly to 218K from 217K.