| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 00:30 | Australia | CPI, y/y | Quarter IV | 5.4% | 4.3% | 4.1% |
| 00:30 | Australia | CPI, q/q | Quarter IV | 1.2% | 0.8% | 0.6% |
| 01:30 | China | Manufacturing PMI | January | 49.0 | 49.2 | 49.2 |
| 01:30 | China | Non-Manufacturing PMI | January | 50.4 | 50.6 | 50.7 |
| 07:00 | Germany | Retail sales, real unadjusted, y/y | December | -2.4% | -2% | -1.7% |
During today's Asian trading, the US dollar rose moderately against major currencies, and is preparing to record the largest monthly increase since September, while market participants are preparing for the announcement of the results of the Fed meeting, which may provide clues about the timing of monetary policy easing.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.18% to 103.58. Since the beginning of January, the index has added 2.17% as market participants lowered expectations regarding speed and scale rate cuts on the back of strong US economic data and statements by Fed policymakers. As for today's Fed meeting, the Central Bank is expected to hold interest rates steady but flag cuts are coming by dropping language indicating it is weighing further hikes. According to the CME FedWatch Tool, markets see a 42.8% probability of a 25 basis point rate cut at the Fed meeting in March and a 86.8% probability of a rate cut in May. In 2024, futures traders expect five rate cuts of 25 bps.
The Australian dollar fell 0.5% against the US dollar, as weaker-than-expected Australian inflation data increased the likelihood that the Central Bank will soon begin easing monetary policy. The Australian Bureau of Statistics said that in the 4th quarter, CPI growth slowed to 4.1% per annum from 5.4% per annum in the 3rd quarter. Economists had expected CPI growth of 4.3%. On a seasonally adjusted quarterly basis, inflation rose 0.6% - again missing forecasts for 0.8% and down from 1.2% in the 3rd quarter. The RBA's trimmed mean was up 0.8% on quarter and 4.2% per annum, while the weighted mean rose 0.9% on quarter and 4.4% per annum.
The euro fell 0.3% against the US dollar as investors adjust their positions ahead of the Federal Reserve meeting. Market participants are also awaiting eurozone CPI data, which will be published tomorrow. According to forecasts, overall inflation fell to 2.7% year-on-year from 2.9% in December, and core inflation fell to 3.2% from 3.4% earlier. Although weak economic data may indicate that monetary policy easing would now be appropriate, experts believe that it is still necessary to wait and see how inflation will develop in early 2024. While GDP remains weak and inflation continues to slow, it is possible that rates will be cut as early as the April ECB meeting, although it must be recognized that the risks lean towards a later step.