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U.S. Inflation Data and Powell Speech Loom as Markets Seek Clarity on Rate Outlook

1 week ago

Investors are bracing for a pivotal week in the financial markets, with U.S. producer prices set for release on Tuesday, a key indicator of inflationary pressures. Adding to the anticipation, Federal Reserve Chair Jerome Powell is scheduled to speak, offering potential insights into the Fed’s policy stance.

The spotlight will then shift to the consumer price index (CPI) due on Wednesday, which is projected to show a moderation in inflation. However, the CPI is expected to remain elevated, likely too high to justify imminent rate cuts. Market participants are keenly eyeing the CPI data to determine if inflationary trends will persist.

A significant focus remains on the yen, which has weakened due to the policy rate divergence between the Bank of Japan and the Federal Reserve. The yen could see a recovery once the Fed pivots to rate cuts.

The upcoming macroeconomic data presents a dual risk scenario. A hotter-than-expected CPI print could exacerbate inflation concerns, while weaker growth data might stoke fears of either a recession or stagflation. This week’s economic indicators will be crucial in shaping market expectations and the future trajectory of monetary policy.

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