Friday’s US PPI data for January came in higher than expected in all categories and followed an above consensus CPI report suggesting that inflation in the world’s largest economy is once again heating up. The data confirms that a March cut from the Fed is now completely off the table. We start the week with the US dollar in a holding pattern with thin markets due to the US Presidents Day holiday, as EURUSD consolidates below 1.08 and GBPUSD rises a touch above 1.26.
Later this week we look forward to the release of the minutes of the ECB’s January policy meeting, with investors likely to be scouring the details looking for clues on when the central bank will be able to cut rates. The minutes are out on Thursday, the same day as the release of the Euro area flash composite PMI survey. Euro area final CPI is also due out on Thursday, with the final reading likely to show the headline rate for January falling to 2.8% from 2.9% in January. Data in the coming days will likely point to the first cut from the ECB coming at the June policy meeting.- It is a fairly quiet week for US data, with little on the docket until the release of the January FOMC meeting minutes on Wednesday, with investors hoping for some insight into when the Fed will be able to deliver its first interest rate reduction. Thursday sees the release of the weekly initial claims report ahead of existing homes sales which are due to be published on Friday.
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