Investors' focus set on PPI and CPI

Danske Research Team Danske Bank A/S

In focus today

Today is light in terms of tier-1 data releases. Hence, focus will be on the German ZEW figures coming at 11.00 CET, where analysts expect -74.0 for the current situation figure, and 35.0 for the expectations figure. Both mark lower prints and as such less optimistic conditions than what was seen in July. This is also what the downbeat Euro Sentix data suggests.

This morning, we also get both the 3M average unemployment figure as well as the 3M average y/y seasonally adjusted wage growth (ex-bonus) figures out of the United Kingdom. Both are scheduled for release at 08.00 CET. Analysts expect unemployment to come in at 4.5% (slightly up from last month's 4.4%), whereas wage growth (ex-bonus) is expected to come in at 5.4% (slightly down from last month's 5.7%).

In the US we get PPI numbers for July at 14.30 CET. Analysts expect both the headline and core figures to stand at 0.2% m/m. The measure could provide the market with early clues on how inflationary pressures have developed into the late summer. NFIB's small business survey is also due for release today, and its price plans measure has been a decent leading indicator for the CPI as well.

Fed's Bostic (voting member) speaks tonight at 19.15 CET.

Overnight the Reserve Bank of New Zealand announce their cash rate. We expect them to keep it unchanged at 5.50%, but it will be a close call between a hold and a 25bp cut.

Economic and market news

What happened overnight

US equity futures look mostly flat this morning, reiterating that investors are gearing up for inflation numbers to come. In the commodity space, Brent oil is down around 1% this morning trading at around USD81.5/bbl.

What happened yesterday

In Denmark, CPI inflation came in at 1.1% y/y (prior 1.8% y/y). The low print and rather big drop from last month was expected given how the 2023H1 electricity tax break is no longer present, and as such skewing, the y/y figures.

In the US both 2- and 10-year yields dropped a few basis points. In the (very) short end of the curve yields were also slightly lower on the session albeit more modestly. The moves in yields to kick off the week wane in comparison to last week's market moves, as investors have their eyes set on today's PPI as well as tomorrow's CPI. They will be looking out for signals as to what to expect next from the economy, after recession fears got hold of markets last week.

Author

Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.