EURUSD pair is surging almost 0.5% today rising to almost 1.173 amid weakeing US dollar, falling treasuries yields and strong risk appetite on Wall Street. ECB holded interest rates unchanged on today meeting, signalling that price pressure from the energy markets may lead to rising and destabilized energy markets even with the Iran conflict will end. Of course, this adds more uncertainty and may slow the European economy. The bank will watch not only inflation itself but rather markets and consumer respons to that, which make further interest rate hikes in eurozone highly uncertaint. However, todays US macro data were not very strong.
Growth disappointed slightly, with GDP at 2.0% vs 2.3% expected, but the consumer remains firm: nominal spending rose 0.9% MoM, while income growth surprised to the upside. The labor market also looks tight, with jobless claims clearly below expectations. The bigger issue is inflation. Headline PCE remains elevated, core PCE was firmer than expected on the advance measure, and the Employment Cost Index accelerated to 0.9%, suggesting wage pressure has not fully cooled. Overall, this is not a recessionary print, but it is also not clearly disinflationary. For the Fed, the data support a cautious stance and reduce the urgency for near-term rate cuts.
US macro data for today
- US GDP Growth (QoQ, annualized): 2.0% vs 2.3% expected, 0.5% prior
- US GDP Price Index: 3.6% vs 3.9% expected, 3.7% prior
- US GDP Deflator SA Advance: 3.6% vs 3.6% expected, 3.7% prior
- US PCE Prices Advance: 4.5% vs 4.5% expected, 2.9% prior
- US Core PCE Prices Advance: 4.3% vs 4.1% expected, 2.7% prior
- US PCE Price Index YoY: 3.5% vs 3.5% expected, 2.8% prior
- US PCE Price Index MoM: 0.7% vs 0.7% expected, 0.4% prior
- US Core PCE Price Index YoY: 3.2% vs 3.2% expected, 3.0% prior
- US Core PCE Price Index MoM: 0.3% vs 0.3% expected, 0.4% prior
- US Consumer Spending MoM: 0.9% vs 0.9% expected, 0.5% prior
- US Personal Income MoM: 0.6% vs 0.3% expected, -0.1% prior
- US Real Personal Consumption MoM: 0.2% vs 0.3% expected, 0.1% prior
- US Initial Jobless Claims: 189K vs 212K expected, 214K prior
- US Continuing Jobless Claims: 1.785M vs 1.815M expected, 1.821M prior
- US Employment Cost Index: 0.9% vs 0.8% expected, 0.7% prior
EURUSD (D1 interval)
Source: xStation5
Eurozone inflation is rising again and if European consumers will show resilience - ECB interest rate hikes are not "off the table".
Source: XTB Research, ECB, Macrobond
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