This week US CPI was in major focus as investors tried to speculate on what it would mean around the pace and extent of US rate hikes. The print doesn’t change the big picture showing the headline falling for the 7th consecutive time and the core falling for the 4th consecutive time. The m/m readings were high, but that was expected. The disinflationary process is still underway, but a flurry of Fed speakers on Tuesday continued to make the case for a higher-than-expected Fed terminal rate. This kept the USD bid, gold pressured, and stocks finding sellers too.

Other key events from the past week

  • USD: US Disinflation Continues, Feb 14: The drop in the year-over-year data points was offset by the rise in the month-over-month prints. However, the print itself did not change the fact that disinflation is still underway in the US.
  • US oil: China re-opening boost? Feb 15: The IEA raised its 2023 oil demand forecast by 200K bpd to 101.9mln bpd citing China demand and increasing air traffic. Is oil set to soar higher in the second half of February?
  • GBP: Stagflation fears fading? Feb 15: The BoE will be relieved to see a third consecutive fall in headline inflation to 10.1% this week. However, the UK is still facing double-digit inflation, so it’s too early to say stagflation fears have faded.

Key events for the coming week

  • EUR: PMI prints, Feb 21: A flurry of European PMI prints are due next week. Will the recent positive bounce in Eurozone data continue? Will a strong set of figures increase expectations of a higher terminal rate for the ECB?
  • GM’s Super Bowl Ad: Does GM’s EV aims make it a buy?
  • NZD: Interest Rate Decision, Feb 22: The RBNZ will make its interest rate decision next week. STIR markets see a 73% chance of a 50bps hike. So, if the RBNZ only hikes by 25bps, and revises forward guidance lower, watch out for a potential AUDNZD upside.

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