The USD is flat, oil prices are steady, equity markets are down, and US yields are mixed ahead of Tuesday's US & German inflation report. The USD could be on track for its seventh day of losses, which would be its longest losing streak since mid-2020. Equity markets start the week under pressure as investors take a cautious stance heading into a data-heavy week, which could guide the timing of a Fed rate cut. Tuesday sees the release of the crucial US Consumer Price Index, following last week's dovish Fed comments and expectations from money markets that the Fed will ease in June. The core prices in the CPI are forecast to edge 0.3% higher in Feb m/m and 3.7% y/y, which would be the smallest annual rise since April 2021. Elsewhere, Bitcoin tests a fresh 52-week high, hitting $71,712.29 after the UK FCA approves crypto-related securities. Oil prices consolidate ahead of reports from OPEC and the IEA this week. Today, we expect markets to consolidate without any high-tier data releases. This week's focus is Tuesday's US, India, and Germany CPI report, the EU Finance Ministers meeting in Brussels, and UK jobless Claims & Unemployment. Wednesday EU & UK Industrial Production. Thursday US PPI, Retail Sales, Initial Jobless Claims & Business inventories. Friday Canada housing starts, China property prices, France, Italy & Poland CPI, US Industrial Production, UoM Consumer Sentiment & Empire Manufacturing. Intraday, we expect markets to remain within current trading ranges ahead of Tuesday's crucial US CPI report.
In other news. UK regulators to allow crypto-related securities. Portugal's center-right wings tight election as far-right surges. The EU warned of the rising risk of systemic financial shocks from continent warming. The US military airlifts embassy personnel from Haiti and bolsters security. The Polish President proposed that NATO spend 3% of GDP on defense. IMF Chief Georgieva wins German banking for a second term. Canada proposes a halt to the planned increase in beer tax.
In currency markets. JPY extends gains as markets focus on the potential of a BoJ rate hike as soon as this month. The USD looks set to have its worst seven-day losing streak in nearly four years. We expect currency markets to hold within current ranges ahead of the US inflation report on Tuesday. CNY is flat, while Asian currencies firm 0.1% on average against the USD. Trading currencies are mixed, with SEK weakening 0.3%, AUD & NOK down 0.15%, while NZD, MXN, ZAR & CHF are up 0.1%, and JPY strengthening 0.3% vs USD.
In commodity markets. Oil and copper prices remained firm at 0.3%, natural gas prices strengthened by 0.6%, gold and wheat prices rose by 0.1%, and soybean prices fell by 0.2%.
CAD is flat to start the trading week as currency markets remain sidelined ahead of Tuesday's crucial US inflation report. Domestically, Friday saw the economy add 40,700 jobs in February, which was twice the forecasted jobs growth, which was somewhat offset as wage growth slowed. The unemployment rate ticked up to 5.8%. Alongside the US inflation report, markets will also focus on Friday's CAD Housing Starts, which helps show the economy's strength with the high domestic interest rates.
EURCAD holds steady near six-week highs as both currencies are sidelined ahead of Tuesday's US and German inflation reports.
EUR flat lines straddling 1.0950 in early trading ahead of the US & German CPI reports tomorrow. The Euro is sidelined amid a cautious start to the week with the lack of any high-tier data releases today, with investors remaining on the sidelines ahead of crucial inflation reports tomorrow. Domestically, the Euro tested its highest level since early January, testing 1.0980 on Friday before consolidating in the US session. The German Harmonized Index of Consumer Prices y/y Feb to hold steady at 2.7%. Intraday, we expect the Euro to remain capped at 1.1000.
GBPEUR slips off its 4-week highs as markets consolidate ahead of the German inflation report on Tuesday.
GBP holds steady in early trading without any high-tier data releases, and investors are sidelined heading into a busy week of data releases. The pound tested a 7-month high on Friday, just short of 1.2900 after last week's dovish Fed comments. Domestically, the BoE is expected to be the last of the major global central banks to keep its interest rates on hold until August. Intraday will focus on BoE policymaker Mann's speech to help provide direction to the pound.
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