Gold rallied 1000pts after the disappointing US CPI, will the rally continue?
Fed is not under any immediate pressure to accelerate tightening of monetary policy after the CPI reading overnight.
- February CPI headline is in-line with consensus expectations, rising 0.2% after a 0.5% increase in January, and 2.2% y/y from a 2.1% gain in the previous month
- Latest CPI data will have little impact on March FOMC meeting, at which Fed Chairman Jerome Powell is broadly expected to raise rates by 25 bps
- There are be concerns that the White House may have just become a less business-friendly place which fuelled a palpable sense of risk aversion, which could strengthen the yen in short run.
- However, we need to highlight that the correction in U.S. stocks may prove to be short-lived. There has been an erratic wave of resignations and reappointments since Trump came to power, but none of them have caused lasting market impact.
Fullerton Markets Research Team
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