What inflation reports are you trading this week?

This week, the most important economic events are split between the United States and China. Inflation data from these two countries will be at the forefront of traders’ minds as they set their positions this week.

Wednesday 09 March

Inflation rate in China year-on-year FEB

China’s annual inflation rate for February is due Wednesday afternoon. China’s annual inflation rate has declined significantly over the past three readings, falling from 2.3% in November 2021 to 0.9% in January 2022. Now inflation in the country is well below the range prescribed by the People’s Bank of China (PBoC) and could even head lower in the February result. The market consensus is for inflation to fall by ten basis points to 0.8%.

Such a reading would give the PBOC more reason to continue easing monetary policy. PBoC Governor Yi Gang expects to take such steps, noting last Wednesday that the bank expects it will “increase support to key areas and weak links in the economy.”

Thursday March 10

JOLTs Job vacancies JAN

The Jolts Job Openings report for January is released early Thursday morning.

The number of jobs in the United States has floated around 10-11 million over the past 7 months. January’s employment numbers are not expected to be any different. Market consensus predicts no change in this month’s report, with 10.9 million jobs left unfilled by workers nationwide.

The JOLTS report follows last week’s Nonfarm Payrolls (NFP) for February, which far exceeded market expectations. Last Friday, the NFP recorded that the US economy added 680,000 jobs, against 400,000 expected. The February report was the best in seven months.

Friday March 11

FEB annual inflation rate

ECB decision on interest rates

A quick note should be made that the European Central Bank will make an interest rate decision on Friday. This event requires only a cursory note due to the ECB’s extreme dovish stance on EU inflation (5.8% in February). As such, the market believes that the ECB will not move the interest rate from its current level of 0% per annum and will not provide noncommittal commentary.

Otherwise, the most significant event on Friday will be the year-over-year US inflation rate for February.

Currently, inflation in the United States is at its highest level in 40 years, at 7.5% year-on-year. The market expects inflation to hit 7.9% in February.

The US inflation rate will inform the US Federal Reserve’s interest rate decision on March 15-16. A high inflation figure puts pressure on the Central Bank to consider going ahead with 50 basis points. A rising possibility of 50 basis points will likely move the dial in the markets for US stocks, gold and USD pairs.

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