European and US futures are trading lower today, while investors are unsure about the future path of the bull market that we have seen so far this year. There is a lot of noise in relation to the Fed policy, while economic numbers are closely watched by the interested parties.
Today is mainly about the European data and the CPI numbers coming out of Germany. Due to certain technical calculation challenges, the publication of the German CPI for January was delayed previously. Nonetheless, today we are likely to see a rapid review of the risks associated with determining whether or not the EU CPI dropped as much as the flash statistics from the previous week showed they would have.
In contrast to the data for the EU CPI, it is anticipated that the German CPI for January will increase from 9.6% to 10% year-on-year and will gain 1.3% month-on-month. A miss, either way, might see a large shift in the EUR/USD, with a mild reading driving some euro depreciation.
Later in the day, we have the US Weekly Jobless Claims number coming out at 1:30 PM GMT, and the forecast for the number is 191K, while the previous reading came in at 183K.
US stock market
On Tuesday, statements made by Fed Chairman Jerome Powell were met with indifference by investors in US markets. The Dow Jones Industrial Average saw a loss of 207 points, or 0.6%, during the regular trading session yesterday. Both the S&P 500 and the Nasdaq Composite had losses of 1.1% and 1.7%, respectively.
It’s possible that the Federal Reserve’s next policy moves will determine the course of the 2023 rally’s next stage. At the beginning of this week, Federal Reserve Chair Jerome Powell said that while inflation is decreasing, rates may still increase.
More Hawkish Notes
Yesterday, Federal Reserve officials contributed more noise to the ongoing debate about the current monetary policy that had been stated by the Fed chairman earlier this week. Christopher Waller, a governor of the Federal Reserve, issued a stern warning about inflation on Wednesday, stating that the battle is not yet won and that it may result in higher interest rates than the market players are now expecting.
Federal Reserve Governor Christopher Waller said that the employment market is “robust” and could fuel consumer spending, which would maintain upward pressure on inflation. His comments were mainly targeting the US NFP report that was released last week.
The January jobs report showed nonfarm payroll growth of 517,000, which indicated that the employment market is “robust.” Waller delivered the following prepared words during his presentation at the Arkansas State University Agribusiness Conference: “We are seeing that our hard work is starting to pay off, but we still have further to go.”
The Fed official made it clear to market players that it is a very lengthy war, with interest rates being higher for a longer period of time than some people now anticipate. However, in order to get the work done, he is fully focused on what to do and what it takes and will not hesitate to do whatever is necessary. Basically, he was adding further hawkish monetary policy stance to the current view presented by the Fed Chairman presented recently.
Google’s Bard Event
Alphabet Inc., the parent company of Google, saw its stock price drop by more than seven percent by the end of trading on Wednesday after the company hosted an event to promote its new artificial intelligence chatbot called Bard. Executives from Google spoke about some of Bard’s capabilities at an event that took place on Wednesday and was live-streamed from Paris. The presentation demonstrated how Bard might be used to showcase the benefits and drawbacks of various options, such as the purchase of an electric automobile or the organization of a vacation in Northern California, for instance. This came just one day after Google’s competitor, Microsoft, hosted an event of its own to demonstrate new AI technologies.
On Monday, Google made the formal announcement of Bard. The company also said that it would begin rolling out the technology within the next several weeks. The race for competing search engines has begun, and in the coming quarters, a new player will emerge, and it is highly important for investors and traders to keep an eye on this.