Fundamentals of the Day: March 12, 2024

Daily Fundamentals - Quantum Strikes
Daily Fundamentals - Quantum Strikes

Today’s economic calendar is headlined by critical data releases from the United States, with the Consumer Price Index (CPI) and Inflation Rates set to take center stage. These figures are highly anticipated by market participants as they provide significant insights into the economic health of the US and have a direct impact on the EUR/USD currency pair. Let’s delve into the details of today’s key economic indicators:

1. US Consumer Price Index (CPI) for February:

  • Scheduled Release Time: 15:30 (5h 48min from now)
  • Previous: 308.417
  • Consensus: 310.3
  • Analysis: The CPI is a primary gauge of inflation, reflecting changes in the cost of living by measuring the price change of a basket of goods and services. An increase from the previous 308.417 to the expected 310.3 could signal rising inflationary pressures in the US, potentially strengthening the USD against the EUR as higher inflation could prompt the Federal Reserve to adopt a more hawkish monetary policy stance.

2. US Inflation Rate Month-over-Month (MoM) for February:

  • Scheduled Release Time: 15:30 (5h 48min from now)
  • Previous: 0.3%
  • Consensus: 0.4%
  • Analysis: This measure provides insight into the short-term inflationary trends. A rise from 0.3% to 0.4% could indicate an uptick in inflation, influencing the Federal Reserve’s interest rate decisions and impacting the EUR/USD exchange rate.

3. US CPI Seasonally Adjusted (s.a) for February:

  • Scheduled Release Time: 15:30 (5h 48min from now)
  • Previous: 309.685
  • Consensus: 310.6
  • Analysis: The seasonally adjusted CPI helps to remove the effects of seasonal variations and provides a clearer view of the underlying inflation trends. An expected increase to 310.6 suggests a continued rise in consumer prices, potentially affecting USD valuation.

4. US Core Inflation Rate Month-over-Month (MoM) for February:

  • Scheduled Release Time: 15:30 (5h 48min from now)
  • Previous: 0.4%
  • Consensus: 0.3%
  • Analysis: Core inflation, which excludes volatile food and energy prices, offers a more stable view of inflation. A decrease from 0.4% to 0.3% could indicate a softening in core price pressures, which might ease concerns over runaway inflation and impact the USD’s strength.

5. US Core Inflation Rate Year-over-Year (YoY) for February:

  • Scheduled Release Time: 15:30 (5h 48min from now)
  • Previous: 3.9%
  • Consensus: 3.7%
  • Analysis: This annual measure of core inflation provides a longer-term perspective on inflation trends. A decrease to 3.7% could suggest that inflationary pressures are moderating, potentially influencing Federal Reserve policy and EUR/USD dynamics.

6. US Inflation Rate Year-over-Year (YoY) for February:

  • Scheduled Release Time: 15:30 (5h 48min from now)
  • Previous: 3.1%
  • Consensus: 3.1%
  • Analysis: The annual inflation rate reflects the long-term trend in price changes. A steady rate of 3.1% indicates consistent inflationary pressures, which could shape the monetary policy outlook and affect the EUR/USD pair.

Historical Context: The latest releases show a trend of increasing CPI and mixed signals from inflation rates. The consistency in the YoY Inflation Rate and the slight fluctuations in the Core Inflation Rate YoY highlight the nuanced inflationary landscape in the US.

Market Impact: Traders should brace for potential volatility in the EUR/USD pair following these releases. Higher-than-expected inflation rates could bolster the USD as they suggest a stronger economic outlook and possible hawkish shifts in Fed policy. Conversely, lower-than-expected figures could weaken the USD, providing a lift to the EUR/USD pair.

As always, it’s crucial for traders to stay informed and prepared to adjust their strategies in response to the data releases. Today’s economic indicators will play a pivotal role in shaping market sentiment and the direction of the EUR/USD currency pair.

Trading our dreams into reality,

Mihai Paul Olteanu