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Market Focus: Upcoming US CPI, PPI and ECB Rate Statement Attract Market Attention


What happened in the market last week?

  • Market volatility was high last week due to central bank rate decisions and speeches from key leaders.
  • RBA hiked interest rates from 3.35% to 3.60%, causing the Australian Dollar to weaken.
  • RBA Governor Lowe faced controversy for reportedly receiving a taxpayer-subsidised mortgage for a five-bed property.
  • Bank of Canada left rates unchanged, believing rates are high enough to impact inflation rates
  • Federal Reserve Chairman Jerome Powell’s comments on potential rate hikes caused the USD to strengthen aggressively.
  • Powell tried to backtrack his comments to prevent further USD strength.
  • Non-Farm Payroll data showed employment figures at 311k above the estimated 224k, but average hourly earnings dropped from 0.3% to 0.2%.
  • Unemployment rate also rose to 3.6%, leading to the USD weakening.
  • Silicon Valley Bank’s closure due to bond portfolio losses resulted in the largest bank failure since the global financial crisis, causing a significant drop in stocks on Friday and shaking up the banking sector.
Chart, waterfall chart

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Source: VT Markes MT4

Last Week Market Pair Changes (All data is taken from the MT4 VT Markets)

Last week, the USD experienced a slight decrease in value due to the employment data not meeting the previously forecasted expectations.

  • Gold gained strength, increasing by 0.65%.
  • The EURUSD rose by 0.16%.
  • The GBPUSD remained relatively unchanged, with a slight increase of 0.01%.
  • The USDX decreased by 0.34%, and USDJPY also weakened by 0.65%, likely due to the impact of the US Employment data, 
  • US Indices tumbled on Friday as tech-focused lender Silicon Valley Bank shut down following losses in its bond portfolio, resulting in a bad week for the indices as the DJ30 ended the week lower by 4.14%, while NAS100 was also down by 3.32%. 
  • USOUSD (WTI) ended the week with a 3.76% loss due to concerns about potential interest rate hikes by the Fed.

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Source: VT Markets Economic Calendar

What to focus on this week?

This week, market participants are closely monitoring the release of key economic indicators in the US, including the Consumer Price Index, Producer Price Index, and Retail Sales. The Rate Statement from the European Central Bank is also expected to draw significant attention. These highly anticipated releases have the potential to cause significant fluctuations in the markets, providing valuable insights for traders to guide their decisions.

Here are key events to watch out for:

Consumer Price Index (CPI) | US (March 14)

In January 2023, the US witnessed a 0.5% month-on-month rise in consumer prices, the most in three months. 

Analysts anticipate a 0.4% increase in February.

Producer Price Index (PPI) | US (March 15)

Producer prices for final demand in the US increased 0.7% month-on-month in January 2023, the most in seven months.

Analysts expect a 0.3% increase in February.

Retail Sales | US (March 15)

Retail sales in the US unexpectedly jumped 3% month-on-month in January 2023, the biggest increase since March 2021.

For February, analysts expect a 0.2% increase.

Employment Change | Australia (March 16)

Employment in Australia unexpectedly declined by 11,500 to 13.72 million in January 2023. Meanwhile, unemployment rate unexpectedly increased to 3.7% in January 2023 from December’s near five-decade low of 3.5%.

For February, analysts estimate that 51,000 jobs will be added, while unemployment rate will be at 3.6%

European Central Bank Rate Statement (March 16)

The ECB raised its interest rate by 50bps to 3% in February 2023.

Markets have fully priced in a 50bps increase this month, with a chance of a similar hike in May, after several policymakers backed the idea that rates will have to rise higher and stay higher for some time to bring inflation back to target.

Prelim UoM Consumer Sentiment | US (March 17)

The University of Michigan’s consumer sentiment for the US rose to 67 in February 2023, up from the preliminary reading of 66.4, and marking the highest level since January 2022. 

Analysts anticipate that the index for this month will be in the range of 67.5 to 68.

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.