SPUS - Week Ahead: China Returns And Flash PMI Featured After U.S. Rate Adjustment Was Extended
2024-02-17 08:05:00 ET
Summary
- The US January CPI and PPI came in stronger than expected and this extended the recovery in US interest rates.
- The yen has fallen for seven consecutive weeks and the threat of intervention by MOF officials had little sustained impact.
- China returns from its long holiday - estimates of strong domestic travel fanned optimism of a recovery in consumption.
The US January CPI and PPI came in stronger than expected and this extended the recovery in US interest rates. In turn that helped underpin the dollar. We do not think the data itself changes the Fed's stance. At least seven Fed officials speak in the coming days to test this hypothesis. There are still several key reports before the data dependent FOMC meets again in about four weeks. Owing to the different weights and methodology, the PCE deflator, which the Fed targets, is likely to be better behaved. Still, the two-year Treasury yield ( US2Y ) popped above 4.70% at the end of last week, a new three-month high.
The dollar has risen against most of the major currencies for six of the seven weeks to start the year. There are a couple of exceptions to note. The yen has fallen for seven consecutive weeks and the threat of intervention by MOF officials had little sustained impact. The other exception is the Australian dollar and the Scandis. They have moved higher for two weeks in a row. This may be a function of risk-appetites that have driven the S&P 500 ( SP500 , SPX ) and NASDAQ ( NDX ) to new record highs. Europe's STOXX 600 and the Nikkei ( NKY:IND ) near record highs....
Week Ahead: China Returns And Flash PMI Featured After U.S. Rate Adjustment Was Extended