US indices and gold recover losses after inflation fears in the US | Top Vip News

Market week ahead: US indices, Gold Recoup losses after US Inflation Fears

Inflation in the United States remains sticky at both the producer and consumer levels, but US indices appear to be ignoring these price pressures and remain near recent multi-year highs.

This week’s US inflation releases helped push US Treasury yields and the dollar higher this week as financial markets continue to revise expectations for US rate cuts. Both US CPI and PPI data came in above expectations, pushing up the US dollar, while US indices took a hit earlier in the week. The moves were mostly reversed by the end of the week, leaving most markets little changed at Friday’s close.

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US Dollar Index Daily Chart

Mid-week volatility can be clearly seen on the daily VIX chart with a strong post-US CPI rally on Tuesday. Again this movement was reversed during the rest of the week.

VIX Daily Chart

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While US indices remain at or near recent multi-year highs, an index that has underperformed its global rivals, the FTSE 100, had a very strong week thanks to favorable economic data from the UK. The UK 100 also benefited from the slight appreciation of the US dollar, as around 70% of the company’s profits were earned overseas.

UK recession confirmed by dismal Q4 GDP data

UK retail sales soar in January to erase December slump

Sterling update: UK inflation unchanged in January, rate cut expectations cut

FTSE 100 daily chart

Change in

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Daily -40% 58% 3%
Weekly -48% 89% 2%

What does it mean for price action?

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Gold also pared its losses this week, helped in part by the precious metal being heavily oversold, according to a technical indicator.

Gold (XAU/USD) Takes a Small Bid as Oversold Conditions Begin to Fade

Technical and fundamental forecasts – as of February 19

Sterling Weekly Forecast: Data drought could lead to further GBP/USD declines

The pound has been quite resilient despite some mixed economic news out of the UK, but there is much less on the agenda next week.

Euro Weekly Outlook: EUR/USD, EUR/GBP and EUR/JPY – Analysts and Forecasts

It looks increasingly likely that the ECB will be the first major central bank to start cutting interest rates, and this will affect the value of the single currency.

Gold and Silver Forecast: Metals Challenged by Stronger USD and Delayed Rate Cuts

Friday’s better-than-expected PPI numbers added to Tuesday’s stubborn CPI data, setting the dollar up for a positive week. The weekly and daily charts conflict between gold and silver.

US Dollar Forecast: Bullish bias prevails, setups on EUR/USD, USD/JPY, USD/CAD

This article analyzes the technical outlook for three major US dollar pairs: EUR/USD, USD/JPY and USD/CAD. In the article, we assess market sentiment and examine essential price levels that traders should have on their radar in the coming days.

All articles written by DailyFX analysts and strategists

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