US10Y yield about to reach 2.0%, oil get into $100 soon, and huge beat on job creation (NFP) 467,000 compared to the median forecast of 125,000 kick the previous ADP release out of the picture. With all the growth stats above the pre-pandemic level all across the major economy, rising wage, workers scarcity. Inflation inevitably will burn more hotter, and next week we potentially will have another volatile week, as it’s scheduled for US CPI release. This is happening in the context of mounting concerns about another Fed policy mistake and a stunning lack of urgency in policy guidance.
Schedule of Releases for the U.S. Consumer Price Index
The most important schedule to watch this year
This all adding more pressure for ‘behind the curve’ Fed. Hawkish BoE and rate hike. Even the always dovish ECB we know, start to shift into more aggressive stance. Lagarde flip to hawkish or “less dovish” by not addressing clearly the press conference question on her previous statement ‘2022 hike is unlikely’ was digested by market as clear shift tone and market start pricing in for June August rate hike, shaking the forex market as participants in rush buying the Euro. The very odd one is RBA, Phil Lowe communicating in dovish mode still.
No matter how Central Banks communicating their forward guidance, we are not fall back off the tightening cycle, All the number in stats suggest that the ‘transitory’ theme was a fatal reading mistake, and Central Bank won’t be trapped into more far from the curve situation to control the inflation. All this bring us to conclusion to still strong bullish on USD into March.