Categories: Market Overview

US inflation sparks risk appetite

The US consumer price index rose 0.4% in February, slowing the annual rate to 6.0%, in line with economists’ expectations. The core price index, which excludes food and energy, rose 0.5% for the month (0.4% expected) and slowed slightly to 5.5% for the year from 5.6%.

It is important to note that the monthly price increase remains above the 0.17% needed to reach an annual inflation rate of 2%. This is despite falling commodity prices. Technically, the latest figures do not support the hypothesis of a sustained slowdown in inflation.

Nevertheless, price increases are not out of control, and the effects of the previous policy tightening are not yet fully reflected in the economic data. The robust labour market data of the last two months has not led to a significant acceleration in the rate of price and wage increases, and this seems to be a good reason for the Fed to raise rates by 25 points and not 50 as feared a week ago, but also not to abandon the rate hike altogether, as was almost done at the height of the banking mini-panic on Monday.

The inflation data did not initially trigger a strong reaction in the currency market. However, in the last few minutes there was some demand for the dollar and for equities, as we see a return of capital to US assets after yesterday’s near-panic selling. Looking beyond the next few minutes, it is worth remembering that the recovery in risk demand (stock buying) is also feeding a weaker dollar and supporting commodity prices.

The FxPro Analyst Team

The FxPro Analyst Team

Our team consists of financial market experts. Our dedicated professionals prepare reviews on the foreign exchange market situation, Crude Oil, Gold and Stock Indices. All the analysts are regularly published in the world leading economic media.

Share
Published by
The FxPro Analyst Team

Recent Posts

NZDUSD Wave Analysis 10 January 2025

- NZDUSD falling inside weekly impulse wave C - Likely to fall to support level…

1 day ago

GBPUSD Wave Analysis 10 January 2025

- GBPUSD broke key support level 1.2300 - Likely to fall to support level 1.2100…

1 day ago

WTI crude oil Wave Analysis 9 January 2025

- WTI crude oil reversed from support level 72.25 - Likely to rise to resistance…

2 days ago

USDCAD Wave Analysis 9 January 2025

- USDCAD reversed from support zone - Likely to rise to resistance level 1.4450 USDCAD…

2 days ago

GBPCHF Wave Analysis 8 January 2025

- GBPCHF reversed from resistance zone - Likely to fall to support level 1.1200 GBPCHF…

3 days ago

USDJPY Wave Analysis 8 January 2025

- USDJPY broke resistance level 158.00 - Likely to rise to resistance level 160.00 USDJPY…

3 days ago