- European indices finished today's session lower, with DAX 40 falling 1.72% to its lowest level since February 1st, after hotter-than-expected inflation data overshadowed upbeat GfK Consumer Confidence.
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German consumer sentiment improved for a fifth consecutive month heading into March as energy prices drop, while the Q4 GDP contraction in Europe's largest economy was steeper than previously estimated. For the week, the STOXX 600 lost 1.3% and the DAX 40 dropped 1.4%.
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ECB rate cuts are no longer priced in 2023, the first time since December.
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Major Wall Street indices resumed downward moves, with following latest PCE figures and a set of hawkish remarks from several Fed members.
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Dow Jones is trading 1.20% lower, while the S&P 500 and Nasdaq 100 fell 1.5% and 2.1% respectively as Core PCE prices, Fed’s preferred gauge to measure inflation, rose by 4.7% YoY and surpassed market expectations of 4.3%. At the same time, US consumer spending rebounded sharply in January amid solid income growth, pushing back on the idea of a policy pivot any time soon.
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Fed's Collins: Recent US data affirms the case for more rate hikes.
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Fed's Bullard: Markets have factored in the possibility of a changed fiscal stance as well as a more aggressive Fed.
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Fed's Jefferson: Wage growth is still running too high to be consistent with timely, and a sustainable return to 2% inflation. Ongoing imbalance between supply and demand for labor suggests high inflation may come down, only slowly.
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Fed's Mester: The PCE report shows that the Fed needs to do a little more.
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Fed Swaps price in Peak Policy rate of 5.45% in July 2023.
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USD is best performing major currency while AUD and JPY lag the most. USDJPY pair dropped to its lowest level in over two months after incoming BoJ Governor Ueda stated the central bank must maintain its ultra-low policy stance for the time being. EURUSD pair fell 0.50% to lowest level since early January.
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Stronger dollar and higher yields put pressure on precious metals. Gold drooped below $1810 and is moving towards crucial support at $1800, while silver fell below $21.00 mark.
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Oil prices erased early losses and Brent currently gains 1.3% while WTI rose 0.80% higher each while US natural gas prices rose 3.0% and broke above local resistance at $2.50.
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Cryptocurrencies are trading lower amid general risk aversion. Bitcoin pulled back to crucial support at $23,000, while Ethereum dropped below $1600 handle.
USDJPY pair rose over 1.3% on Friday boosted by fresh Ueda comments and PCE figures. If current sentiment prevails, major resistance at 137.50 may be at risk. This level is marked with previous price reactions and 200 SMA (red line). Source: xStation5
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