Key US inflation data today

The main currency pairs are not much changed ahead of key inflation data in the US later today, with the euro and sterling marginally firmer against the dollar trading at around $1.0850 and $1.2670 respectively and EURGBP still hovering in and around £0.8550.

Bond and equity markets are also treading water ahead of today’s data. Bond yields are nudging up this morning, after ending flat to slightly lower yesterday, while European stocks are a touch firmer at the open today.

A couple of ECB members yesterday suggested June as a possible start date for interest rate cuts, which is where the market is also after the recent re-pricing of expectations, while Fed member Collins said that, while progress in reducing inflation further “could…be bumpy,” she “believes it will likely become appropriate to begin easing policy later this year.”

Data released earlier this morning showed the annual rate of (EU-harmonised) inflation in France fell further in February to 3.1%, in line with expectations and its lowest level since September 2021, while (EU-harmonised) inflation in Spain decelerated to 2.9% this month from 3.5% in January. Data for Germany and Ireland are published later today ahead of the February inflation reading for the Euro area tomorrow.

Later today we get PCE inflation for January in the US. This is the Fed’s target measure of inflation, with the consensus expecting the annual headline and core rates to have dipped to 2.4% and 2.8% last month from 2.6% and 2.9% in December. A miss in either direction relative to forecasts could move markets.

Other economic data due include mortgage approvals and credit growth in the UK, and consumer spending in the US.