FOREX Fundamental Analysis on September 13, 2023
Forex currency trading is going on without sharp movements as investors are waiting for the release of the US inflation report (12:30 GMT). The probability that the Fed will change the rate at its September meeting, no matter what today's statistics show, is extremely low, but the regulator may take the report as a guide to action in November.
Bloomberg forecasts that CPI will accelerate by 0.6% or from 3.2% to 3.6% (y/y) in August. But core inflation is expected to slow down from 4.7% to 4.3% (y/y). The Federal Reserve, making a decision on monetary policy, is usually guided by the core inflation rate, and if it declines, there is no special sense in monetary restriction. In any case, this is the opinion of 94 out of 97 experts of Reuters. At the same time, 17 out of 97 expect at least one more rate increase before the end of 2023.
The American Bankers Association believes that the cycle of tightening financial conditions has gone according to plan and has reached the finish line. Here they believe that in the next three quarters, US GDP will sag by a maximum of 1%, and the Fed will cut the rate by 100 basis points to 4.5% in 2024, as inflation will come down to 2.2%
But inflation may take much longer to fall than analysts expect, so the Fed will keep the markets on edge by noting the possibility of a continuation of the monetary restriction cycle.
I believe that if the inflation in the USA slows down more than experts expect, EUR/USD will get a good chance for a bullish rally, although it is unlikely to last long, taking into account the general state of affairs in the Eurozone.
Those who like to trade forex on the news can build up longs above 1.072 until the results of the ECB meeting. However, if the CPI goes up, the dollar will be strengthened on expectations of the Fed rate hike. And this is already a signal to sell EUR/USD.