New Fed Head Powells Testimony in Focus as US Orders set to Drop
Philip McHugh February 27th 2018 - 2 minute read
- German CPI figures to disappoint?
- US goods orders expected to plummet
- USD investors await Powell testimony
German inflation expected to slip
Germany will publish its latest CPI figures later this afternoon, with markets bracing for a possible downturn in the euro following their release.
This comes as economists forecast that Germany’s inflation rate will have slipped from 1.6% to 1.5% in February, with a drop in oil prices seen as the likely driver of the decline.
Should inflation fall in line with expectations, this will be the fourth consecutive decline in prices and will see inflation strike its lowest levels since May last year.
With the European Central Bank (ECB) targeting an inflation rate of 2%, the dip in inflationary pressures in the EU’s largest economy is unlikely to inspire hopes of a rate hike from the bank in the near future.
US durable goods orders may weaken USD
USD may stumble this afternoon as the US Census Bureau releases its latest durable goods orders data.
Analysts predict that orders will have contracted sharply at the start of the year, with growth expected to decline 2.0% after previously climbing 2.9% in December.
This comes as economists forecast demand for transport equipment will have moderated in January after surging at the end of 2017.
The drop will also place US durable goods orders last month well below the long-term average of 0.34%.
Markets look to Powell testimony for rate hints
Movement in the US dollar today looks set to be dominated by Federal Reserve Chair, Jerome Powell’s first congressional testimony.
Powell will face the US House of Representatives' Financial Services Committee later today, where he will deliver the Fed’s semi-annual report on monetary policy and the US economy.
With this in mind all eyes are likely to be on Powell as markets hope for any further hints on whether the Fed could target up to four rate hikes this year.
The Fed will make its next rate decision in March, with CME’s Fedwatch tool currently placing the odds of a March rate hike at over 85%.
Upcoming Data
Tuesday, 27 February, 2018
13:00 EUR German Inflation
13:30 USD Durable Goods Orders
15:00 USD Fed Powell Testimony
Written by
Philip McHugh