Sooner:

• JPM expect the first rate cut in June, having previously expected the first in September.
• the ECB ho hold in July
• and then cuts in both September and October

Deeper:

• JPM expect a total of 100bps in cuts, having previously expected 75

Analysts at the firm are wary of the trend in core inflation, saying its recent slowing may be the result of the dissipating of transitory factors and making the trend difficult to discern:

• They point to stronger wage data as a factor that cause some inflation „stickiness“.
• Say that the disruption to shipping due to Red Sea attacks could also add to pressure for higher inflation

***

JPM are calling the first ECB rate cut later than many other analysts are. Market pricing is for the April meeting (see below).

***

The ECB dates to watch this year:

This article was written by Eamonn Sheridan at www.forexlive.com.

• US January UMich prelim consumer sentiment 78.8 vs 70.0 expected
• US existing home sales for December 3.78M vs 3.82M estimate
• Canada November retail sales -0.2% vs 0.0% expected
• Fed’s Daly: It’s premature to think rate cuts are around the corner
• Feds Bostic: Wants to make sure inflation is on way to 2% before cuts
• Fed’s Goolsbee: If we make good progress on inflation, we need to factor that into rates
• Baker Hughes oil rig count -2 to 497
• Atlanta Fed GDPNow growth estimate for Q4 remains at 2.4%

Markets:

• S&P 500 up 59 points to all-time high close of 4839
• CAD leads, GBP lags
• Gold up $6 to $2028
• US 10-year yields down 1.4 bps to 4.13%
• WTI crude oil down 26-cents to $73.82

The big news was in the stock market where the S&P 500 broke through the 2021 intraday high. That’s certainly not a move that looked like it would happen early on as the market showed middling gains but steady bids starting at lunchtime in New York continued until late in the day.

The turn in equities weighed on the US dollar on most fronts. Cable climbed to 1.2702 from 1.2660 and the euro rose 25 pips to 1.0894.

In general, the dollar fell 20-30 pips across the board after earlier strengthening. One notable move was in the Canadian dollar, which strengthened despite a $1 intraday fall in oil. Canadian retail sales were poor in November but the December advanced number was better and that was enough to reverse some of the recent loonie losses. USD/CAD finished the week down 56 pips to 1.3427.

USD/JPY has been the story of the past month but it took a break today. It rose to 148.50 early in New York trade but sagged back to unchanged at 148.11 on the day.

This article was written by Adam Button at www.forexlive.com.