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US & UK Inflation Data are the Focus of the Day

Fresh U.S. inflation data later is expected to give investors additional clues as to how quickly the Fed may raise rates after slashing them in 2020 to cushion the economy from the impact of Covid-19.

Expectations are for the January CPI to show a 0.4% increase after a 0.5% rise in the prior month – with the year-over-year reading expected to show a 7.2% climb after U.S. inflation for December hit its fastest pace in nearly four decades.

Most Asian currencies weaken against the dollar in the early Asian trade, ahead of the U.S. January CPI report due later today.

Market participants’ relief toward recent central bank officials’ comments that tempered Fed rate-increase expectations may prove superficial in run-up to this report’s release

Sterling is likely to strengthen as the BOE could raise interest rates by more than the market expects. The BOE raised its key rate by 25 basis points to 0.50% last Thursday but four out of nine policymakers preferred a larger 50 basis points rise, which suggests the possibility of “more upside” to rates being priced in by markets if inflation data stays elevated.

Thursday 10th February High Impact Events

• 15.30 – US – PPI, Core PPI, & Unemployment Claims

Potential instruments to Trade: USD Crosses. 

• 20.01 – US – 30 Year Bond Auction

Potential instruments to Trade: USD Crosses. 

• 22.05 – UK – BOE Gov. Bailey Speaks

Potential instruments to Trade: GBP Crosses. 

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