Analyzing the Impact of the U.S. PCE Price Index Rise and NZ's Policy Interest Rate Decision on the Market? The trades f
The minutes from the notable FOMC meeting indicated that "the majority recognized the risk of premature interest rate cuts." Following this, there has been a robust buying of the US dollar. Even if there are sell-offs, buyers step in when prices drop, making it difficult for a clear trend to emerge.
As planned, we picked up the drop in Bitcoin, but it did not move as expected, leading to a stop-loss. However, we continue to believe in a significant upward trend for Bitcoin and will buy on dips. We also believe that the Nikkei Stock Average, which has reached an all-time high, still has room to rise, so we plan to buy if opportunities arise.
Looking forward, we are focusing on two points:
- Will the US dollar strengthen after the release of the PCE Price Index on the 29th?
Last week's release of the US January CPI showed a year-over-year increase of 3.1% and a month-over-month increase of 0.3%, with the core CPI up 3.9% year-over-year and 0.4% month-over-month, exceeding expectations. The super core (excluding housing costs, focusing on the price trends in the service industry), which Chairman Powell of the Federal Reserve is closely watching, also rose by 0.85% month-over-month. Furthermore, the US January PPI showed an increase in indexes related to portfolio management and investment advice, relevant to the PCE. The January PCE Price Index is also expected to show a rate of increase similar to the CPI and PPI, and if it meets or exceeds expectations, it could likely delay the start of interest rate cuts by the FOMC.
The growth rate of the January PCE Price Index is expected to be 0.3% month-over-month, indicating an increase from the previous month's (December) rate of 0.2%. If this expectation materializes, it would mean that inflationary pressures in the US continue, possibly delaying the start of the Federal Reserve's interest rate cuts. If the market's expectations are met or exceeded, we anticipate stronger buying of the US dollar.
- Additional interest rate hikes speculated by some for NZ?
On the 28th, the Reserve Bank of New Zealand (RBNZ) will hold a Monetary Policy Committee (MPC) meeting and announce the policy interest rate and statement. Following the employment statistics released earlier this month, which showed improvement, some financial institutions are speculating on further interest rate hikes, attracting more attention than usual.
With high expectations for a rate hike leading to robust buying of the NZD, there might be sell-the-fact selling immediately after a hike. However, the content of the statement will also play a crucial role; if there is no rate hike, selling may intensify.
P.S.
Now that the Tet holiday in Vietnam is over, I'm preparing to experience spring in Japan.
I intentionally chose the Tet period to come to Hanoi, but honestly, it's not highly recommended if you want to relax due to the significant temperature fluctuations.
On some days, the temperature rose to about 30 degrees Celsius, only to drop to near 10 degrees the following day, causing a roller-coaster-like temperature change that led many people to fall ill.
If you're considering visiting Hanoi, the periods from April to June and September to December offer many sunny days with more stable and rising temperatures, which would be good for planning your trip.
Have a great weekend :)
+17,515 USD in A Week With Discretionary Trading 24h In February 2024
