Today's news headlines:
'US Consumer price growth set to show January slowdown'. Despite slowing the pace of interest rate hikes from four consecutive 75 basis point hikes down to 25 basis points last month, the narrative from Federal Reserve officials continues to be a hawkish one. The Federal Funds rate hikes seem to be doing the job; US year-on-year CPI has fallen steadily from 9.1% last June to end the year at 6.5%, and today's data is expected to show a further decline to 6.2%. Despite the robust labour market data released at the beginning of the month exerting upward pressure on consumer prices, some economists are predicting that the Fed could be in a position to pivot and turn to cutting rates by the end of the year if CPI continues to consistently fall as it has done for the last six months. (Financial Times)
'Ukraine's allies prepare pledges of more ammunition and air defences'. As Ukraine and Nato claim ammunition shortages are hindering their military efforts in defending against the Russian invasion, western capitals will today announce further support, including munitions and air defence equipment, to aid Kyiv forces. Despite Ukrainian President Zelenskyy's cries for fighter jets and battle tanks, the immediate need for ammunition and air defence capabilities is more pressing given Moscow's new offensive, which Nato officials claim has already begun. (Financial Times)
Sterling jumped this morning off the back of the benefit claimants' data showing that almost 13,000 fewer people were claiming unemployment-related benefits in January compared with December. Cautious overnight trading before US CPI data was unsurprising; Asian stocks broadly edged higher, but gains were limited in anticipation of the inflation figures. Further Fed hikes will likely maintain pressure on Asian markets as foreign capital flows to the region slows down, and other central banks aim to keep pace with their US counterpart.
New Zealand Inflation Expectations q/q: 3.3% vs 3.62% previously
UK Benefit Claimant Count Change: -12.9K
UK Unemployment Rate: 3.7% vs 3.7% previously
Eurozone Flash GDP q/q: 10:00AM
US CPI m/m: 1:30PM
US CPI y/y: 1:30PM
US Core CPI m/m: 1:30PM
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.