Inflation and rate cut bets come to the fore

The Greenback gathered some fresh upside traction against the backdrop of rising cautiousness prior to the release of US inflation figures measured by the PCE on Thursday. The renewed strengthening of the US Dollar weighed on sentiment and prompted some corrective moves in the risk complex.

Here is what you need to know on Thursday, February 29:

The Greenback regained further balance and prompted the USD Index (DXY) to reclaim the area beyond the 104.00 hurdle despite lower yields. On February 29, all the attention will be on the inflation gauged by the PCE, along with Personal Income, Personal Spending, Pending Home Sales and the usual weekly Initial Jobless Claims. Furthermore, Fed’s Bostic, Goolsbee, and Mester are due to speak.

EUR/USD traded on the defensive for the second straight session, although it managed to bounce off lows near 1.0800. The preliminary Inflation rate tracked by the CPI in the broader euro area takes centre stage on February 29, followed by Germany’s Retail Sales, flash Inflation Rate and the labour market report.

GBP/USD retreated to multi-day lows near 1.2620 on the back of renewed buying interest in the Greenback. Mortgage Approvals and Mortgage Lending are due on February 28.

USD/JPY kept its weekly choppiness well in place above the 150.00 barrier. On February 29, the usual weekly Foreign Bond Investment figures are due, seconded by flash Industrial Production, Retail Sales, Housing Starts and the speech by BoJ’s Hajime.

AUD/USD deflated to two-week lows in the sub-0.6500 region, maintaining its trade below the 200-day SMA. Data-wise, in Oz, comes Housing Credit and advanced Retail Sales on February 29.

Prices of WTI traded in a volatile session after hitting a new 2024 peak around $79.60 per barrel as traders assessed another unexpected build in US inventories, the likelihood of delayed rate cuts by the Fed, and the persistent crisis in the Middle East and the Red Sea, all coupled with speculation of the continuation of supply cuts by the OPEC+.

Prices of Gold clung to their daily gains around the $2,030 region, while Silver prices extended their leg lower, leaving the door open to a potential test of the $22.00 mark per ounce sooner rather than later.