Forex Analysis: 12 Mar 2024 Currency & Shares

by | Mar 12, 2024 | Forex Analysis

US Dollar Notes with text Forex Analysis 12 Mar 2024 - ForexTabs

Forex and Stock Market Analysis Update

Currency Insights:

  • US Inflation and Its Ripple Effects: The forthcoming CPI data release by the U.S. Bureau of Labor Statistics on March 12, 2024, is poised to be a pivotal moment for investors and the Federal Reserve’s policy decisions.
  • CPI Projections for February: The headline CPI is projected to rise by 0.4%, primarily due to escalated energy costs, with an expected steady annual inflation rate of 3.1%.
  • Core CPI Expectations: A month-over-month increase of 0.3% is anticipated for the core CPI, potentially bringing the annual inflation down to 3.7% from 3.9%.
  • Potential Market Responses: Any deviation from these projections might trigger significant price movements across various assets.
  • Consequences of Inflation Surprises: A CPI figure exceeding expectations could hint at enduring inflation, possibly influencing the Fed to revise its PCE forecast upwards and reconsider the extent of rate cuts. This scenario may boost bond yields and the USD, adversely affecting gold and equities.
  • Effects of a Lower CPI: Conversely, a CPI reading below expectations could underscore disinflation, bolstering the case for more aggressive rate cuts in 2024, thereby potentially lowering yields and the USD, which would be favorable for gold and risk assets.

Stock Market Brief:

  • Anticipating CPI Report Impacts: The focus is set on February’s CPI report due on Tuesday, critical for shaping the Fed’s forthcoming interest rate decisions.
  • Inflation Expectations for February: Inflation is predicted to maintain its 3.1% annual rate, with a monthly increase of 0.4%, reflecting the influence of rising energy and gasoline prices.
  • Core Inflation Trends: Core inflation is expected to show a year-over-year increase of 3.7%, with a monthly growth of 0.3%, marking a slowdown from previous figures due to moderating shelter costs despite other persisting core service expenses.
  • Shelter Inflation Dynamics: A predicted slowdown in OER inflation could narrow the gap with rent inflation, impacting overall core inflation figures.
  • Fed’s Upcoming Rate Decisions: With the core CPI figures in focus, the market leans towards the expectation of the Fed holding rates steady in the next meeting, with anticipation of rate cuts commencing in June.

Cryptocurrency Update:

  • Bitcoin remained relatively stable, priced at $72,071.
  • Ether saw an increase of 1.71%, reaching $4,025.

This analysis, provided by Forextabs.com, delves into the critical factors shaping the forex and stock markets, highlighting the importance of upcoming economic indicators. Stay informed with Forextabs.com for detailed market analysis and insights, empowering your trading decisions in these fluctuating financial landscapes.